Penalty u/s 44 and 45 of Competition Act levied as ‘real ambit and purpose’ was intentionally not made known

Amazon.com NV Investment Holdings LLC Vs Competition Commission of India (NCLAT Delhi)

The Appellant/Amazon because of the violations committed by it, had intentionally not made known the `real ambit and purpose’ of the `Combination’. Penalty under Section 44 and 45 of the Act, 2002 levied.

Facts-

Amazon.com NV Investment Holdings LLC, a subsidiary of Amazon.com Inc. Amazon wanted to notify a ‘Combination’, bearing Registration No. C- 2019/09/688, to the Competition Commission of India through a Notification dated 23.09.2019 (“Notice”), as per Section 6(2) of the Competition Act, 2002.

The Combination was with respect to acquiring of 49% shareholding in Future Coupons Pvt. Ltd. alongwith other transactions. Notably, in Part V: Description of the Combination of the Notice, the Combination notified by Amazon comprised the undermentioned three transactions:

Transaction I- The issue of 9,183,754 Class A voting equity shares of Future Coupons Pvt. Ltd (“FCPL”) to Future Coupons Resources Private Limited (“FCRPL”). Prior to, and immediately post issuance of such equity shares, FCPL will be a wholly owned subsidiary of FCRPL;

Transaction II- The transfer of 13,666,287 shares of FRL held by FCRPL (representing Two decimal Five Two Percent (2.52%) of the issued, subscribed and paid-up equity share capital of Future Retail Limited (“FRL”), on a Fully Diluted Basis) to FCPL;

Transaction III- The acquisition of the Subscription Shares representing Forty Nine percent (49%) of the total issued, subscribed and paid-up equity share capital of FCPL (on a Fully Diluted Basis) by Amazon, by way of a preferential allotment.

Based on the information furnished by Amazon, the CCI had granted approval to the ‘Combination’.

On 25.03.2021, the FCPL filed an application before the CCI under Sections 43A, 44 and 45 of the Competition Act, 2002 (Act, 2002), in relation to the acquisition of 49% shareholding in FCPL by Amazon. It was submitted that Amazon has initiated arbitration proceedings in relation to transfer of assets of FRL, a company in which FCPL holds 9.82% of the shareholding, and there are related litigations pending before the constitutional courts. It was alleged that Amazon had taken completely contradictory stands in the arbitration proceedings and constitutional courts with respect to its investments in FCPL, as compared to the representations and submissions made before the CCI. Such contradictions were said to establish false representation and suppression of material facts before the CCI.

The CCI was of the prima facie view that Amazon failed to identify and notify FRL Share Holding Agreement as a part of the ‘Combination’, in terms of Regulation 9(4) and Regulation 9(5) of the Combination Regulations; Amazon had concealed its strategic interest over FRL; and Amazon had made false and incorrect representations and concealed/suppressed material facts in contravention of the provisions of the Act, 2002. Accordingly, the CCI had issued a Show Cause Notice under Sections 43A, 44 and 45 of the Act, 2002 to Amazon, on 04.06.2021.

After perusal of facts and materials on record, the CCI had arrived at the conclusion that Amazon had suppressed “the actual purpose and particulars” of the 2019 deal and sought to “establish false representation and suppression of material facts”. It was observed that it was necessary to examine the deal afresh and hence its approval “shall remain in abeyance” until then.

The CCI had also imposed a penalty of Rs. 200 Crore on Amazon for failing to identify and notify the FRL Shareholders Agreement as a part of the deal, which was an obligation under Section 6(2) of the Competition Act, 2002.

As regards failure to notify combination in terms of the obligation cast under Section 6(2) of the Act, Section 43A of the Act enables the Commission to impose a penalty, which may extend to one percent of the total turnover or the assets, whichever is higher, of such a combination. Accordingly, for the above mentioned reasons, the Commission hereby imposes a penalty of INR Two Hundred Crore upon Amazon”.

In exercise of the powers conferred under sub-section (2) of Section 45 of the Act, the Commission hereby directs Amazon to give notice in Form II within a period of 60 days from the receipt of this order, and, till disposal of such notice, the approval granted vide Order dated 28th November, 2019, in Combination Registration No. C-2019/09/688, shall remain in abeyance”.

Amazon filed an appeal before the NCLAT challenging the CCI order dated 17.12.2021 on the issues of imposition of Rs. 200 Crore penalty; keeping in abeyance the approval granted to the ‘Combination’ of Amazon; and certain findings against Amazon in the said order.

Conclusion-

Held that the Appellant/Amazon because of the violations committed by it, had intentionally not made known the `real ambit and purpose’ of the `Combination’. However, the imposition of maximum penalty of Rs.1 Crore each by the CCI under Section 44 and 45 of the Act, 2002 is slightly on the higher side/ excessive one. As such, this `Appellate Tribunal’, based on the relevant facts and circumstances of the case, Viz., availability of competitions in the market, financial health of the industry, etc., which float on the surface and also, in the teeth of the `1st Respondent/CCI’ in the impugned order dated 17.12.2021 had provided an opportunity to the `Appellant/Amazon’ to file a fresh `Notice’ in Form II, etc., to prevent an `aberration of justice’, in `furtherance of justice’, exercising its prudence and as a mitigating factor, imposes a penalty of Rs.50 Lakhs (Rupees Fifty Lakhs) each, as per Section 44 and 45 of the Competition Act, 2002, and the said sum, is directed by this `Tribunal’ to be paid by the `Appellant/Amazon’, within 45 days from today.

FULL TEXT OF THE NCLAT JUDGMENT/ORDER

The Appellant/Amazon.com NV Investment Holdings LLC has preferred the instant Competition Appeal (AT) No. 01 of 2022 as an `Aggrieved Person’ (under Section 53 (B) of the Competition Act, 2002) on being dissatisfied with the `impugned order’ dated 17.12.2021 (vide Ref No.C-2019/09/688/7099), passed by the `1st Respondent/Competition Commission of India (CCI)’ in proceedings under Sections 43A, 44 and 45 of the Competition Act, relating to certain findings of the `1st Respondent/CCI’ and the consequential directions imposing a penalty of INR Rs.202 Crores and a further direction that the `Approval’ accorded to the Combination Registration No. 688 was kept in abeyance till disposal of the `Notice’ under Form I with a direction to the `Appellant’ to refile `for Approval’ in Form II.

2. Earlier, the `1st Respondent/Competition Commission of India’ while passing the `impugned order’ dated 17.12.2021 (in Ref No. C­2019/09/688/7099) against the `Appellant’ (Amazon.com NV Investment Holdings LLC under Sections 43A, 44 and 45 of the Competition Act, 2002), among other things at Paragraph Nos. 33 to 40, 41 to 47, 57, 60, 68, 69, 75, 77, 80, 82, 83, had observed the following:

33. “Prior to the Approval Request, a situation update relating to the negotiation between the parties, seen as a part of another internal e-mail dated 10th July, 2018 of Amazon (Situation Update), elaborates on the background and purpose with which the Combination was contemplated between Amazon and Future Group. The relevant extract of the Situation Update is reproduced below:

“10 July 2018

Project Taj – Investment in National Multi-category Copperfield-seller Situation Update:

The Taj group is India’s largest and multi-category offline retailer with 280 multi-category stores, 620 grocery stores and 400 fashion only stores in top 50 cities. The Taj group’s retail company, Taj Retail Limited (TRL) is publicly traded and has a market cap of $4.1B1 (July 9, 2018). Amazon’s India team likes Taj’s management team, store footprint, private label capability and believe they are one of the key players in the offline retail market to partner with. For an overview of relevant Taj group businesses, please refer to Annexure I.

On 24 May, 2018, we received an approval from … to indicate interest (to Taj’s founder) to invest between $400 to $500 MM for upto 9.99% stake in TRL. In India, our ability to pursue investments / acquisitions of retailers is limited because laws restrict foreign investment in multi-brand retail assets (i.e., retailers selling multiple brands across categories under one roof). However, because TRL is a listed company, Alpha [Amazon] can acquire upto 9.99% of TRL directly (as a foreign portfolio investor). Eventual ownership will vary upon final pricing discussions.

Upon receiving … approval, we engaged into deeper discussion with Taj on pricing / valuation, investment structure and strategic rights that we could get through an investment. As of last week, we have aligned with Taj on an investment framework to proceed further with this transaction. A Business Commercial Framework (BCF) to build and accelerate Ultra-Fast Delivery across top-20 cities in India leveraging Taj’s national stores footprint as a Copperfield seller, is agreed in principle with Taj team; please refer to Annexure II for investment rationale and more details of the BCF. This note provides background on the transaction, details of the investment framework and FAQs addressing the key points to consider before going back to Taj team with our offer…

FAQs

1. What are the strategic objectives that we want to achieve through Taj?

We are looking to secure the following business objectives through this transaction:

a. Ability to become the single largest shareholder in India’s largest offline retailer (TRL) when foreign direct investment (FDI) opens up in this sector.

b. Precluding / blocking competitive interest in TRL, and preventing an IC from acquiring TRL.

c. Together with the investment, Alpha will enter into a commercial agreement to utilize TRL’s pan-India store infrastructure to bolster Alpha’s ultra-fast delivery program, exclusively carry private label portfolio in grocery and value fashion, and drive higher fees for Alpha.

2. What is our business rationale and BCF for Taj?

We believe that a two-hour delivery promise, for 15,000 SKUs across top-20 cities will be a unique differentiating capability. It will allow us to cover 85% of our Prime members and 63% of all customers. To serve this customer base, we believe working closely with a large Copperfield seller is important. We believe that Taj is one of two key pan-India retailers worth pursuing (the other being Brigade). Taj has a strong portfolio of private label selection in grocery (450+SKUs, across packaged foods, home and personal care) and value fashion (27 brands with a median ASP of $9.2 (INR 600), contributing to 80% of their GMS for fashion). Against our investment of $400 to 600MM in TRL, we estimate the discounted cash flow value of BCF over 10 years of $702MM (INR 45.6B); please refer to Annexure II for investment rationale and more details of the BCF. When foreign investment laws are relaxed and higher stake or acquisition of multi-brand retail assets is permitted beyond today’s possibilities, we would have a foot-in-the-door to acquire more in this strategic asset, should we so desire at the time. For further details please refer to Annexure II – BCF Strategic Value. Importantly, our investment in TRL will be liquid given that TRL is publicly traded in the Indian stock market, and therefore, we can recover our investment in case TRL fails to deliver.

3. What is the proposed transaction?

An overseas Amazon entity, registered as a ‘foreign portfolio investor’, will acquire 9.99% (through a fresh issuance of shares) of TRL. Simultaneous with the investment, Alpha India will enter into a commercial agreement (BCF) with TRL, and Taj Consumer Limited (TCL), and Taj Lifestyle Fashion Limited (TLFL) in relation to the matters listed in FAQ 2…

6. If we were to execute both Taj and Brigade, why is a Call Option important in both situations?

Our ICs (BB, FK, Paytm Mall) are aggressive on grocery, general merchandise and general electronics categories. Specifically in grocery and fresh categories, we are lagging behind BB and FK is also nipping at our heels. Walmart’s expertise in offline retail will likely spur FK and Alibaba’s investment and technology will continue to push BB ahead.

Given the above, we need to build deep strategic alignments with offline grocery retailers to leverage their execution capabilities to power our fresh and grocery offering. India has 6 offline retailers (Taj, Brigade, Reliance Retail, D-Mart, Spencers and Nature’s Basket). With a process of elimination on parameters of asset quality, partner quality and availability, only two i.e. Taj and Brigade remain. If we are able to close our investment in Brigade, we would secure a high quality asset, however it will lack the scale and national footprint that Taj offers. Further, Brigade is our bet to own a high quality grocery operation. Taj, on the other hand, is an investment in a multicategory Copperfield seller with a larger pan-India footprint. Getting a Call option in both assets allows us to acquire and raise our bet, at our discretion, in the player we feel best meets our objectives after having tested close operational alignment with both in 3-7 years following investment; when regulations permit.

7. If we were to execute both Taj and Brigade, how would we decide which Call Option to exercise then?

Keeping aside our tenets of Financial Discipline for the moment; holding a Call Option in both assets keeps our options open and it also serves as an incentive / deterrent to Brigade / Taj. If Brigade executes flawlessly, we can exercise our Call Option (when legally permissible) and make Brigade a spearhead of our 1P grocery operations. If Brigade doesn’t execute to our bar, then we can choose to pull back from further investments in Brigade and double down on our investments in Taj, provided that it meets our expectations. If Taj executes well both on BCF as well as an independent retail asset, when regulations relax, we will have the ability to increase our stake in India’s largest offline retailer and keep our competition. If Taj doesn’t execute well, we can exit our ownership in listed stock. Holding Call Options in both assets, thus allows us to control our destiny in a thoughtful manner in the future…

Annexure II – Strategic value accruing to Amazon as a result of the Business Commercial Framework (BCF).

We started working with Taj, couple of years ago, as a Copperfield seller in three cities (across 23 stores) to learn and develop the ultrafast delivery model in India. In April-2018, we served about 2000 orders per day with an AOV of $12.3 (INR 802) and UPO of 9.3. We earn merchant fee of 5.4% and have a CPLF of -$4.55 (-INR 296) per order (55.5%). If we improve the order economics, we believe Taj’s footprint of physical infrastructure can offer a unique 2-hour-delivery service across multiple categories in top-20 cities. Therefore, we constructed a BCF to estimate value creation from this partnership across their retail assets and private label capabilities.

1. Offer 2-hour-ready selection in top 4 cities with improved economics: An average hypermarket store carries an in-stock selection of about 15,000 SKUs – 8500 in softlines, 5500 in grocery and 2000 in general merchandising (primarily home and kitchen). There are 104 stores in top 4 cities. In five years we can scale to 21K orders/day with an AOV of $24 (INR 1549) and GMS of $181MM (INR 11B). In this model we will bear only the last mile costs with increase in SoA fee for grocery at 13.5% (+810bps over current levels) and 32% for softlines. Therefore, we will improve our order economics with an OP per order of -$0.8 (- INR 53) or (+2495bps vs. 2021 LRF). OP less infra will be $1.3 (INR 84) (+2466 bps vs. 2021 LRF)

2. Build and expand 2-hour-delivery service in the next 16 cities: These cities are likely to grow faster than the top-4 cities and therefore will lead in retail consumption. Taj has nearly 120 stores in these cities and carry an average selection of 12,000 SKUs. We expect to expand the Copperfield-service to these cities within three years and scale to 31K orders per day with an AOV of $20.9 (INR 1,363) by year 5. The order economics will be similar to that in top-4 cities.

3. Carry Taj’s private label selection across grocery and softlines exclusively: We will leverage Taj’s private label selection to substitute and accelerate the private label selection in Pantry. Our 2020-LRP assumes private-label penetration of 7.0% as proportion of Consumables GMS. We believe we can expand private-label participation to 18% by year-3 (current penetration of Taj is at 30% in FMCG and 60% in Staples). This will give incremental margins of INR 26 per order in Pantry. Taj has capabilities from design to manufacturing for fast and value-fashion brands in apparels, shoes and luggage. Leveraging this capability, we can improve the share of private labels to overall Softlines business by 10% (+500bps) in Year-5. Secondly, we expect Taj’s fashion stores Fashion-Big-Bazaar, Central and Brand Factory to list as a seller, similar to Shopper Stop (we invested for a 5% stake in India’s largest offline fashion department store to onboard 200K+ ASINs across 300 fashion brands) and generate additional 0.5MM order per month. We expect to improve Softlines CP by 507bps by year- by a combination of accelerated PL penetration, increased selection of Central and Brand Factory and improvement in SOA fees.

4. Foot-in-the-door and a strategic option value: Laws in India currently do not permit foreign investment in offline retail companies engaged in both food and non-food retail. This could change in the next 3-5 years, as government of India, is slowly relaxing the laws. At that point, Taj will likely still be the largest asset with pan-India footprint and the possibility of greater control.”

[Emphasis Supplied]

34. Another important internal document of Amazon that shows the basis of entering into the Commercial Arrangements and the share acquisition is its internal note dated 24th May, 2018, the relevant extract of which is reproduced as under:

“Project Taj – National Multi-category Copperfield-seller Background:…Amazon’s India team likes Taj’s management team, store footprint, private label capability and believe they are one of the key players in the offline retail space to partner with. In January 2018, the founder of Project Taj had visited Seattle and presented the Taj Group’s capabilities to Jeff Bezos and the senior leadership team. Since then, we engaged with Taj and discussed a Business Commercial Framework (BCF) to build and accelerate Ultra-Fast Delivery across top-20 cities in India leveraging Taj’s national stores footprint as a Copperfield seller. In India, our ability to pursue investments / acquisitions of retailers is limited because laws restrict foreign investment in multi-brand retail assets (i.e., retailers selling multiple brands across categories under one roof). However, because Taj’s Retail entity is a listed company, we could invest up to 9.99% of the company directly as foreign shareholders. To execute on the above Business Commercial Framework (BCF) the founder of Taj believes a close alignment via a strategic investment with an online player is important. We seek your approval to indicate our non-binding interest (to Taj’s founder) to invest between $400 to $500 MM for up to 9.99% stake in the company. Eventual ownership will vary upon final pricing discussions. This indication of interest to invest in Taj will allow us to get engaged deeper into discussion on pricing / valuation (given fluctuating stock price & regulatory pricing guidelines), deeper financial performance of Taj, regulatory hurdles/challenges and strategic rights…

Investment Rationale: We believe that a two-hour delivery promise, for 15,000 SKUs across top-20 cities will be a unique differentiating capability. It will allow us to cover 85% of our Prime members and 63% of all customers. To serve this customer base, we believe working closely with large Copperfield seller is important. We believe that Taj is one of two key pan-India retailers worth pursuing. Other retailers are sub-scale or part of business groups, or are unsuitable to partner with. Taj has a strong portfolio of private label selection in grocery (450+SKUs, across packaged foods, home and personal care) and value-fashion (27 brands with a median ASP of $9.2 (INR 600), contributing to 80% of their GMS for fashion). An investment in Taj will allow us to provide the following benefits, based the commercial terms we have been discussing with Taj: (a) expand coverage in top four cities with improve the merchant fee to 13.5% (+850bps); (b) build a two-hour-delivery service in next 20 cities; (c) exclusively carry their private label portfolio in grocery and value-fashion; and(d) obtain option value to increase our equity stake when laws change. In summary, against an investment of $400 to 500MM in Taj we estimate the discounted cash flow value of BCF over 10 years of $702MM (INR 45.6B). Our investment will be liquid given that Taj is publicly traded in the Indian stock market…”

[Emphasis Supplied]

35. The Commission notes that the above three internal documents (Internal Correspondence) of Amazon Group are relevant to understand its focus during negotiation with Future Group and what were its objectives to be achieved by way of entering into the Combination. As may be seen, the negotiations between the parties relating to the Combination were taking place as early as May, 2018, wherein Amazon initially planned to partner with Future Group, being a key player in the offline retail market, by acquiring 9.99% shareholding in FRL as well as entering into a business commercial framework to build and accelerate ultra-fast delivery services across the top-20 cities in India, leveraging the national footprints of Future Group. Through these transactions, Amazon Group wanted to secure its ability to become the single largest shareholder of FRL when the foreign direct investment opens up in the retail sector; preclude/ block competitive interest in FRL and utilise the pan-India store infrastructure of FRL to bolster the ultra-fast delivery program and exclusively carry private label portfolio in grocery and value fashion; and drive fees for Amazon. The rationale to enter into such Combination included the need for Amazon to build deep strategic alignments with offline grocery retailers to leverage their execution capabilities to power the fresh and grocery offerings of Amazon.

36. The Approval Request dated 18th July, 2019 suggests that, in view of certain developments relating to foreign investments in India, instead of directly acquiring 9.9% shareholding in FRL, Amazon would use a twin-entity investment structure to invest in FRL i.e., Amazon would acquire 49% shareholding in FCPL which, in turn would hold 8 – 10% of the shareholding in FRL. It was further stated that the number of equity shares of FRL to be held by FCPL was calculated such that Amazon can indirectly hold the same number of shares of FRL that Amazon would have acquired if it had directly invested the consideration in FRL. Further, the consideration has been arrived at on the basis of traded price of FRL shares, and a 25% premium is paid on account of the strategic rights and call option. Furthermore, it is evident that acquisition of shares in FRL/FCPL by Amazon was envisaged as a pre­requisite to enter into commercial agreements between Amazon and Future groups.

37. Seen against the above backdrop, the purpose of the Combination, including the rights over FRL and the Commercial Arrangements with FRL, as enlisted in the summary dated 18th July, 2019 appended to the Approval Request was for investment in FRL and establishing a strategic alignment/partnership between Amazon and Future groups, in the Indian retail sector.

38. Now coming on to the Notice, it is relevant to look at Item 5.3 of Form I, which requires the notifying party to disclose ‘Economic and Strategic purpose (including business objective and rationale for each of the parties to the combination and the manner in which they are intended to be achieved) of the Combination’. Amazon submitted the following as its purpose for the Combination:

“The Investor [Amazon] believes that FCL [FCPL] holds a potential for long term value creation and providing returns on its investment. The Investor has decided to invest in FCL with a view to strengthen and augment the business of FCL (including the marketing and distribution of loyalty cards, corporate gift cards and reward cards to corporate customers) and unlock the value in the company.”18

39. In terms of Regulation 13A of the Combination Regulations, the notifying party is required to provide a summary of the combination containing, inter alia, the nature and purpose of the combination. The relevant extract of the summary filed by Amazon against this requirement states that:

“The Investor [Amazon] believes that FCL [FCPL] holds a potential for long term value creation and providing returns on its investment. The Investor has decided to invest in FCL with a view to strengthen 18 Para 30, at pp. 30 and 31, of the Notice Page 32 of 57 and augment FCL’s business relating to marketing and distribution of corporate gift cards.”19

40. Upon examination of the Notice, a specific query was posed to Amazon, vide letter dated 9th October, 2019, in relation to Item 5.3 of the Notice viz., ‘2.13’. With reference to item 5.3 of Form I, please provide the following: … (c) According to media articles and statements of Mr. Kishore Biyani, the investment by Amazon is strategic to become a part of the ecosystem. Please elaborate’. In response, Amazon had elaborated the gift card business of FCPL and the interest of Amazon to expand its portfolio in the payments landscape in India and stated that:

“In this backdrop, it is submitted that the Proposed Combination will enable the Parties to: (i) enhance Investor’s [Amazon] existing portfolio of investments in the payments landscape in India, (ii) provide an opportunity to FCL [FCPL] to learn global trends in digital payments solutions and launch new and innovative product offerings; and (iii) offer innovative payments solutions to entities so as to enhance consumer convenience and user experience”20.

40. A further query on the rationale of the rights under FRL SHA was posed to Amazon vide letter dated 24th October, 2019 viz. ‘2.5. As per the notice, Acquirer will get certain rights over the FRL. You are required to provide details of shareholding (directly / indirectly), affirmative rights/veto rights/ rights not available with ordinary shareholders in FRL or rights with respect to FRL being acquired by Amazon and strategic and or economic rationale for such rights’. In response, Amazon, inter alia, stated that:

“It is submitted that the Investor’s [Amazon] decision to invest in FCL [FCPL] is, inter alia, based on the following considerations: (a) the unique business model of FCL addresses an existing gap in the payments landscape in India, thereby making it a strong and sound investment opportunity for the Investor (who holds similar existing investments in entities engaged in business activities within the payments market in India); and (b) while FCL has a strong growth potential, in the short term, to add credibility to its financial position, it has invested in, and proposes to invest in FRL, which is a publicly traded company with strong financials and futuristic outlook. In other words, the Investor has considered all the above-mentioned factors in totality to arrive at the value of the proposed investment…21”

[Emphasis Supplied]

42. Amazon had further claimed in the said response that it does not have any direct or indirect shareholding in FRL22, and with a view to protect its investment in FCPL, certain rights have been granted with respect to FCPL’s investment in FRL. These rights were stated to be: (a) ‘contractual investor protection right… with no voting rights, with a view to protect its investment in FCL [FCPL]’23; (b) ‘standard investment protection rights that are commonplace in investment agreements’24; (c) ‘it would be important to note that not only are investors rights limited in scope, they also not extend to any subject matter that encroaches upon the commercial and operation decision making process of the FRL…25’; and (d) ‘investor drives value of its investment from FCL and FRL (by virtue of being an underlying asset of FCL). Therefore, it is essential for the Investor to secure certain rights to protect its investment’26.

41. In stark contrast to the Internal Correspondence of Amazon, the disclosures made against Item 5.3 of Form I, summary filed pursuant to Regulation 13A of the Combination Regulations, query 2.13(c) of letter dated 9th October, 2019 and query 2.5 of the letter dated 24th October, 2019, did not indicate a possibility of the Combination being pursued by Amazon for having a ‘foot-in-door’ in the Indian retail sector, acquire strategic rights over FRL or entering into any commercial partnership with FRL to expand the ability of Amazon in ultra-fast delivery services. Instead, the business potential of FCPL was shown as the driving factor for Amazon to pursue the Combination and FRL was merely shown as a factor of financial strength. The Internal Correspondence of Amazon makes it abundantly clear that Amazon was all along focussed/interested in FRL. The Internal Correspondence of Amazon does not speak about the business potential of FCPL, as has been claimed and projected in the Notice and in the responses to the letters of the Commission. Similarly, the Notice presents the rationale of indirect rights over FRL, as protection to investment in FCPL but the Situation Update dated 10th July, 2018 identifies the same set of rights as answer to the following question ‘What strategic rights do we get through this investment.’ The expressions used by Amazon to describe the rationale behind the indirect rights over FRL varied from time to time: ‘strategic rights’ in its Internal Correspondence; ‘protection to investment in FCPL’ in the Notice given to Commission; and ‘rights derived from FRL SHA are to protect the interest of the investor [Amazon]’ in the response to SCN. While the object and purport of mere investor protection rights are limited to protect the investment made, the object and purport of strategic rights, such as those reflected in the Internal Correspondence, are much different. Such difference is of significance in establishing a proper understanding of a combination and its purpose, and accordingly, deciding the appropriate line of inquiry to assess the effects of the combination on competition. The Commission observes that, in every case of investment, the acquirer would want to protect the value of its investment and the returns therefrom. However, when a strategic acquisition is contemplated to achieve synergies amongst the business activities of acquirer and target enterprise through acquisition of shareholding (or) integration of whole/part of their business (or) commercial contracts/arrangements (or) a combination of these, any right accruing to acquirer pursuant to such acquisition would be beyond, but not limited to, mere investor protection. The purpose of securing strategic interest over FRL and commercial partnership with FRL is much different from FRL, a company with strong financials and futuristic outlook, being merely taken as an element of financial strength and protection to the investment in FCPL.

44. In the Notice, Amazon had represented that its rationale behind the Combination was the business potential of FCPL to create long term value and provide return on the investment made by Amazon. However, the Internal Correspondence of Amazon clearly shows different purposes for envisaging the Combination (i.e., ‘foot-in-door’ in the Indian retail sector, secure rights over FRL that are considered as strategic by Amazon and Commercial Arrangements between the retail business of Future Group and Amazon). In its response to the letters dated 9th October, 2019 and 24th October, 2019 of the Commission, Amazon had continued with the suppression of actual purpose of the Combination. Amazon has not contested the genuineness of the Internal Correspondence or their contents. It is obvious that the purpose of Amazon to pursue the Combination was not the potential of the gift and loyalty card business of FCPL, as has been claimed in the Notice. Rather, FCPL was envisaged only as a vehicle in the Combination to which no value or purpose is ascribed in the Internal Correspondence. Further, it is clear from the above discussed e-mail dated 19th July, 2019 that the entire consideration of the Combination has been arrived at on the basis of 25% premium to the regulatory price of FRL shares and that such premium was paid on account of the strategic rights and the call option provided to Amazon. Thus, the instant matter is a clear, conscious and willful case of omission to state the actual purpose of the Combination despite the disclosure requirement under Item 5.3 of Form I read with Regulation 5 of the Combination Regulations and Section 6(2) of the Act. Further, Amazon has failed to provide any material or plausible explanation in its response to the SCN and in the subsequent submissions to demonstrate that its disclosures against Item 5.3 are correct and that the business potential of FCPL was a consideration for Amazon to pursue the Combination. Seen in the context of the Internal Correspondence and failure to provide any of the said material and/or explanation, it is evident that Amazon, in addition to the omission to state the purpose of the Combination, has misrepresented the Commission by stating that the purpose of the Combination is an opportunity arising from the business potential of FCPL and to add credibility to FCPL’s financial position, FCPL invested and proposed to further invest in FRL, a company with strong financials and futuristic outlook. Seen against the backdrop of Internal Correspondence, the statements of Amazon in the Notice and subsequent submissions dated 15th November, 2019 regarding the purpose of the Combination, stand belied. It is evident that these statements have been made with full knowledge that the same are false in material particulars. Amazon had misled the Commission to believe, through false statements and material omissions, that the Combination and its purpose were the interest of Amazon in the business of FCPL.

45. At this juncture, it also relevant to look at the disclosure of Amazon against Item 8.8 of Form I, which requires a notifying party to furnish documents, material (including reports, studies, plan, latest version of other documents), etc. considered by and/or presented to the board of directors and/or key managerial person of the parties to the combination and/or their relevant group entities, in relation to the proposed combination. The purpose of this requirement is to understand the commercial and economic contours of the given combination in addition to the legal contracts submitted as trigger documents against Item 8.7 of Form I. True and complete disclosure against Item 8.8 enables the Commission to determine the appropriate framework for competition assessment of the Combination. In response to Item 8.8, Amazon had furnished a presentation titled ‘Taj Coupons – Business Plan for 5 years’. The eight page presentation provides only a brief idea of the gift voucher business of FCPL, its business operating model, estimated five-year business size, organisation design, sales team and financial summary, without any reference to FRL.

46. Considering the disclosures in the Notice, including that against Item 8.8, a specific query was posed to Amazon vide letter dated 24th October, 2019 of the Commission: ‘2.1 It is noted that in terms of query 8.8 of Form I, Parties have not furnished requisite documents. Accordingly, you are required to provide documents, material (including reports, studies, plan, latest version of other documents), etc. considered by and/or presented to the board of directors and/or key managerial person of the parties to the combination and/or their relevant group entities, in relation to the proposed combination. Further, for each document, indicate the date of preparation and the name and title of the addressee(s)’.

47. In response, Amazon furnished copies of resolution authorising the execution of FCPL SSA and FCPL SHA, and copies of the reports on legal due-diligence and key tax issues relating to FCPL. Neither copies of the above discussed Internal Correspondence nor any other document containing the actual purpose reflected in the said documents was furnished to the Commission. It is noted that no purpose elaborated in the Internal Correspondence surfaced in any of the material furnished against Item 8.8 of Form I or query 2.1 of the letter dated 24th October, 2019 of the Commission. Similarly, the purpose of the Combination stated in the Notice and subsequent submissions of Amazon, were not a consideration in the Internal Correspondence. These clearly establish that Amazon had knowingly suppressed relevant and material documents to be furnished under Item 8.8 of Form I.

57. It is observed that, in response to Item 5.1.1, no reference was given to FRL SHA or the Commercial Arrangements. Amazon had merely submitted that the value of assets and turnover of FRL is higher than the jurisdictional threshold prescribed under Section 5(a)(i)(A) of the Act. Based on the information relating to the constituent steps of the Combination provided in pages 2 and 3 of the Notice and the disclosure against Item 5.1.2, it is apparent that the financials of FRL were taken into consideration as it was identified as the target enterprise in Transaction II. However, no reference was made to FRL SHA in the disclosures against Items 5.1.1 and 5.1.2. FRL SHA and the commercial agreements, being inter-connected parts of the Combination, their details ought to have been furnished in Item 5.1.2 of Form I. In response to Item 5.1.3, Amazon had given a list of rights to be acquired by it in terms of FCPL SHA to protect its investment in FCPL (Table 3 – The rights proposed to be acquired by the Investor in terms of the SHA to protect its investment in FCL) 34. In this section, it has been brought out that FCPL has to take Amazon’s consent for exercising some of its rights under FRL SHA. However, it has never been the case that Amazon disclosed the fact that FRL SHA was negotiated as a part of the Combination and was executed to achieve one of the objectives of the Combination. Similarly, no reference about the commercial agreements was made in this section of the Notice. The Commission observes that mere consideration of the values of the asset and turnover of FRL cannot be considered as notification of FRL SHA and BCAs, as parts of the Combination.

60. As may be seen above, details of FRL SHA were not mentioned in Item 5.2. As has emerged now, FRL SHA and the commercial agreements were inter-connected parts of the Combination and accordingly, their details ought to have been disclosed against Item 5.1.2 and in the above table.

68. The Internal Correspondence of Amazon clearly highlights that the rights of Amazon over FRL are at the heart of the negotiations and the need for FRL SHA was to achieve the said objective of the Combination. It is for these strategic rights and for the call option, that Amazon had paid a premium of 25% over the regulatory share price of FRL. This makes it clear that neither FRL SHA would have been executed in the absence of other steps/transactions of the Combination nor would Amazon have gone ahead with Transaction III in the absence of FRL SHA. However, in blatant disregard of Regulation 9(4) and 9(5), read with Items 5.1.1, 5.1.2, 5.2 and 8.7 of Form I, FRL SHA was not disclosed in the Notice in its actual context; its inter-connectedness to FCPL SSA and FCPL SHA were suppressed in spite of the disclosure requirements under the said provisions of Combination Regulations. In other words, the mentioning of FRL SHA in footnote 3 of the Notice can, in no manner, be considered a notification of the same as a part of the Combination either in substance or form. This is more so when there were repeated or categorical assertions that the rights over FRL are limited to investor protection and no influence over FRL is acquired and FRL SHA was negotiated independent of the combination. Therefore, Amazon failed to give a single notice covering all the inter-connected steps of the combination, as required in Regulation 9(4) read with Regulations 9(5) and 5 of the Combination Regulations, and Section 6(2) of the Act. Further, Amazon also failed to give true and complete disclosure with respect to substance of its combination in this case, as the FRL SHA was pursued to ensure that the business of FRL become a strategic asset for Amazon to expand and enhance its ultra-fast delivery services.

69. The Internal Correspondence show that the strategic rights over FRL though FRL SHA and FCPL SHA were contemplated by the parties to establish and cement their strategic partnership through a series of commercial agreements. The inquiry in pursuance of the SCN reveals that the Commercial Agreements were essential and inter-connected parts of the Combination and those were the trigger for Amazon to acquire shareholding in FCPL as well as secure rights over FRL. The fact that the commercial agreements are integral parts of the Combination was suppressed in the Notice and the subsequent submissions of Amazon. Amazon had consistently represented that BCAs are independent of the Combination. In para 65 of the Notice, the arrangements between Amazon and FRL for listing of the products of the latter in Amazon marketplace were claimed as “neither inter-connected with, nor part of, the Proposed Combination”. In para 96 of the Notice, the arrangement between ARIPL and Future Consumer for supply of food category products to the formers was stated as “not related to the Proposed Combination, in any manner whatsoever”. Further, in para 100 of the Notice, in relation to the memorandum between APIPL and FRL to offer the option of making payments through the Amazon Pay semi-closed wallet to end consumers making purchases across retail outlets and websites operated by FRL and entities controlled or wholly owned by FRL, it was clarified that the MoU is not related to the Proposed Combination, in any manner whatsoever. Amazon continued with these assertions in paragraphs 45 and 72 of the written submissions dated 15th November, 2019, filed in response to the letter dated 9th October, 2021 of the Commission and paragraphs 4 and 44 of the written submissions dated 15th November, 2019, filed in response to the letter dated 24th October, 2021 of the Commission. These repeated assertions invariably suggest that these commercial contracts were negotiated and executed in the normal course of business of the concerned parties independent of the Combination. The distorted disclosures and omissions in the Notice and subsequent submissions dated 15th November, 2019 of Amazon, as discussed above, do not allow to even suspect that the Commercial Arrangements were parts of the Combination to establish a strategic alignment between the parties in retail sector.

75. A holistic appreciation of the Notice and material brought on record reveals that there has been a wilful and deliberate design threaded across the Notice and subsequent submissions dated 15th November, 2019 of Amazon, to suggest that the Combination consists of only Transaction I, Transaction II and Transaction III; and that FCPL SSA and FCPL SHA are the only two agreements entered into between the parties in relation to the Combination. The manner and extent of assertions regarding FRL SHA is that the same was a pre-existing arrangement amongst the shareholders of FRL, executed pursuant to the Warrants Transaction, and it was negotiated independent of Transaction III i.e., acquisition of 49% stake in FCPL by Amazon. The inter-connection between FRL SHA and the Combination was suppressed. Similarly, the BCAs, although disclosed, were claimed as neither inter-connected with, nor a part of the Combination. However, the Internal Correspondence brings out that BCAs and acquisition of strategic rights over FRL, through the acquisition of shares in FCPL, had been considered together as parts of one composite package, viz., ‘Project Taj [Future Group] – Investment in National Multi-category Copperfield Seller’. FCPL was merely a vehicle for Amazon to acquire interest over FRL, and such interest was considered necessary to implement strategic alignments between the business activities of Future and Amazon groups in India.

77. The Commission notes that the details of overlap between FRL and Amazon Group, provided in the Notice, and subsequent submissions of Amazon as well as the competition assessment conducted in the Approval Order are in the context of FCPL holding warrants in FRL. However, the said assessment is definitely not from the perspective of strategic alignments between FRL and Amazon Group. This is obvious from the Approval Order as it does not make any reference to FRL SHA or the BCAs. The Commission observes that the effect of commercial contracts entered into between FRL and Amazon Group entities, in their normal course of business, would be considerably different from parties contemplating strategic alignments between their business through strategic investments. The regulatory process of notification by the parties that would follow an admission of the commercial contracts being part of the combination and also the purpose of the strategic acquisition of shares and rights would entail consequential presentation of facts, representations, clarifications and undertakings, if any, which would not be present when such contracts are independent of the combination. The nature of inquiry by the Commission in these cases would also be necessarily with due regard to the acquisition and contracts being part of one single understanding to establish a strategic partnership. This regulatory process, in itself, makes the notifying party to furnish true, correct and complete information regarding the actual combination pursued by the parties and thus, meet the requirements of the Act and the Regulations framed thereunder. Concurrently, such process would enable the Commission to appreciate the combination in its actual sense, and accordingly, discharge its functions in terms of the Act. If one were to argue otherwise, it would be sufficient that the notice filed with the Commission merely describes the name of the parties and their business activities and there would be no need to give any other detail as required in Form I or Form II, including the scope of arrangements, their purposes and context of the combination. This is ex facie contrary to the scheme and intendment of the Act and Combination Regulations.

80. Given that the Combination is between players who are known in the online marketplace and offline retailing and they have contemplated strategic alignment between their businesses, the Commission considers it necessary to examine the combination afresh based on a notice to be given in Form II with true, correct and complete information, as required therein. Accordingly, in exercise of the powers conferred under sub­section (2) of Section 45 of the Act, the Commission hereby directs Amazon to give notice in Form II within a period of 60 days from the receipt of this order, and, till disposal of such notice, the approval granted vide Order dated 28th November, 2019, in Combination Registration No. C-2019/09/688, shall remain in abeyance.

82. In the instant case, all the contraventions discussed above arise from a deliberate design on the part of Amazon to suppress the actual scope and purpose of the Combination, and the Commission finds no mitigating factor. Resultantly, the Commission considers it appropriate to levy the maximum penalty of INR One Crore each under the provisions of Section 44 and Section 45 of Act. Accordingly, Amazon is directed to pay a penalty of INR Two Crore.

83. As regards failure to notify combination in terms of the obligation cast under Section 6(2) of the Act, Section 43A of the Act enables the Commission to impose a penalty, which may extend to one percent of the total turnover or the assets, whichever is higher, of such a combination. Accordingly, for the above mentioned reasons, the Commission hereby imposes a penalty of INR Two Hundred Crore upon Amazon.

and `Amazon’ was directed to pay the `monetary penalty’ as imposed (vide paras 82 and 83), within a period of 60 days from the date of receipt of this order.” Appellant’s Submissions in Competition Appeal (AT) No. 1 of 2022: 3. The Learned Counsel for the `Appellant/Amazon’ submits that the `Investor Affiliate’, `Amazon Seller Services Private Limited’ (`ASSPL’) is not acquiring any `Shares’ or `Voting Rights’ or `Assets’ or `Control’ in `Future Retail Limited’ (`FRL’) and as such, Section 5 of the Competition Act, 2002 is not attracted in the instant case. 4. The Learned Counsel for the `Appellant’ contends that as a matter of fact, the transaction is between the `Investor’ and `Future Coupons Private Limited’ (`FCPL’), through a set of three transactions and the `Proposed Transaction II’ has `FRL’ as the target. Indeed, `FRL’ was notified as a `party’ to the combination (bearing Combination Registration No.2019/09/688) (`Combination’). 5. According to the Learned Counsel for the `Appellant’, the `Combined Share’ of the `Investor Affiliate’, ASSPL and FRL in the overall Indian Retail Market was less than 1% in the period between the Financial Year 2016-2017 to Financial Year 2018-19, which fact is not disputed by the `1 Respondent/CCI’, in the `impugned order’. 6. The Learned Counsel for the `Appellant’ points out that when a `Notice’ in Form I was filed, the `1 Respondent/CCI’ discharged its obligation as per Regulation 5 (5) and in the alternative, it is projected on the side of the `Appellant’, that there is no finding of any appreciable adverse effect on competition (`AAEC’) as a consequence of which, a direction to file a fresh `Notice’ in Form II can be issued. 7. The Learned Counsel for the `Appellant’ adverts to the fact that the direction to file a `Notice in Form II’, in regard to a transaction that was consummated two years ago after the receipt of the `1st Respondent/Commission’s’ approval is `arbitrary’ and `contrary’ to the Scheme of the Competition Act, 2002. 8. Added further, the Learned Counsel for the `Appellant’ submits that the `proviso to Section 20 (1) of the Competition Act, 2002, bars the `1st Respondent/CCI’ from enquiring into a consummated transaction, more than one year, after the said transaction had taken effect. 9. The other contention advanced on behalf of the `Appellant’ is that, the date on which the combination took effect is considered to be the date of payment and that the payment was effected on 26.12.2019 and that `FCPL SHA’ came into effect on 26.12.2019 and that the limitation under Section 20 (1) of the Competition Act, 2002 for the `1st Respondent/CCI’ to `inquire’ into the notified Combination, expired on 25.12.2020, being a `Holiday’, the `Limitation’ came to an end on 26.12.2020. 10. It is the stand of the `Appellant’ that assuming but not conceding that the `FRL SHA’ was liable to be notified that the `FRL SHA’ came into effect on 19.12.2019 and hence the limitation would expire on 18.12.2020, as per proviso to Section 20 (1) of the Competition Act, 2002. 11. The Learned Counsel for the `Appellant’ contends that as per proviso to Section 20 (1) of the Competition Act, 2002, the `1st Respondent/CCI’ cannot cause an `inquiry’, after one year, from the date on which the `Combination’ took effect. 12. It is the version of the `Appellant’ the Competition Act does not empower revisiting or reopening the `Approvals’ granted after 210 days in case a notification is filed under Section 6 (2) of the Competition Act or one year from the date on which a combination took effect, in respect of cases covered under `Section 20 (1) of the Competition Act, 2002’. 13. The Appellant’s submission is that in the instant case, the `Notification’ was filed by the `Appellant’ on 23.09.2019 and the `1st Respondent/Commission’ having passed an order under Section 31 of the Competition Act, could not have directed the filing of `FRL SHA’ as a `Combination’ when the same stood disclosed and was also not the direct trigger for the Notification. 14. The Learned Counsel for the `Appellant’ projects an argument that the `1st Respondent/ Commission’ issued a `Show Cause Notice’ dated 04.06.2021 under Regulation 48 of the Competition Commission of India (General) Regulations, 2009 and assuming without admitting that there was no `notification’ of the `FRL SHA’, then, the bar of one year under the proviso would operate and that the `1st Respondent/CCI’, had failed to appreciate this aspect of the matter. 15. The Learned Counsel for the `Appellant’ submits that penalty under Section 44 and 45 of the Competition Act, 2002 is only attracted where the alleged omission / suppression / misrepresentation is material to the `1st Respondent/CCI’ assessment of the notified combination. 16. The Learned Counsel for the `Appellant’ contends that the complaint dated 25.03.2021 was filed by `FCPL’ with full knowledge that `FCPL’ and `FRL’ through their Legal Counsel M/s. Trilegal, were actively involved in the preparation of and had approved all submissions made by the `Investor’ in the Notification. 17. The Learned Counsel for the `Appellant’ brings it to the notice of this `Tribunal’ that the `impugned order’ primarily relies upon the internal correspondence of the `Investor’ dated 24.05.2018, 10.07.2018 and 19.07.2019 and that the emails relating to the year 2018 relate to the period when `Amazon’ was exploring various investment structures, including direct investment in `FRL’ under the `Foreign Portfolio Investment Route’. 18. The Learned Counsel for the `Appellant’ takes a plea that only such facts which impinge upon assessment of whether a notified combination causes or is likely to cause `AAEC’ in terms of the factors mentioned in Section 20 (4) of the Competition Act would be considered as `material’ for the purposes of Section 44 and 45 of the Act, and therefore, `no penal action’ much less a `revocation’ is warranted. Furthermore, all information pertaining to `BCAs’ was disclosed and `BCAs’ would be given effect to, only after the receipt of the approval from the `1st Respondent/CCI’. 19. The Learned Counsel for the `Appellant’ emphatically takes a stand that an `Authority’ created by a `Statute’ must not trespass into the arena of the matters of `Adjudication’ to be made by an `Arbitral Tribunal’. Moreover, the `1st Respondent/CCI’ had proceeded to conduct its `AAEC’ analysis on the assumption of the Contemplated Integration of the `Investor Affiliates’ with `FRL’ (even before the `Investor’ is in a position to exercise the `Call Option’). 20. The Learned Counsel for the `Appellant’ submits that only Section 44 of the Competition Act, 2002 is applicable to the instant case, as it applies to parties to a `combination’, filing a notice under Section 6 (2) of the Competition Act. However, in the present case, there is no `misstatement’ or `misrepresentation’ or `false information’ that was material to the commission’s assessment of the `notified Combination’ and hence the said provision is `inapplicable’ to the present case. 21. The Learned Counsel for the `Appellant’ contends that `any order’ passed by the `Commission’ must be consistent with the ingredients of the Competition Act, 2002, and any `condition’ mentioned in the `Approval Order’ must be pursuant to the exercise of a power which is expressly conferred on the `1st Respondent/Commission’ and available under the Competition Act, 2002. 22. It is the stand of the `Appellant’ that the self same contention of `inconsistency in positions’ was urged by the `FCPL’, the `Promoters’ and `FRL’ before the `Arbitral Tribunal’ and rejected in the `Partial Award’ dated 20.10.2021 and that the `Partial Award’ can be questioned only when the `Final Award’ is passed as per the `Arbitration and Conciliation Act, 1996 and as such it is not permissible to canvass the same point in the instant proceedings. 23. The Learned Counsel for the `Appellant’ contends that in the instant case, the `1st Respondent/CCI’ had acted in breach of the `Principles of Natural Justice’ when it considered entirely a new case against the `Appellant’ resting on the confidential internal documents/emails dated 24.05.2018, 10.07.2018, 04.04.2019 and 19.07.2019 without issuing a separate `Show Cause Notice’ to the `Appellant’. 24. The Learned Counsel for the `Appellant’ submits that neither the `Show Cause Notice’ nor the `FCPLs’ complaint dated 25.03.2021 (which formed basis) contained even a `whisper’ to either the emails / internal documents or the allegations relating to the failure to notify the `BCAs’ as part of the `notified Combination’. According to the `Appellant’ later, these documents/emails were filed by `FCPLs’ as part of its `Response’ dated 22.11.2021. 25. The plea of the `Appellant’ is that in the absence of a separate `Show Cause Notice’ setting out the case being considered by the `1st Respondent/CCI’ against the `Appellant’, the `Appellant’ was not provided with an adequate opportunity to clarify its position in regard to the emails/documents. If the `Appellant’ was apprised that an explanation was required about the context and contents of the internal documents/emails, it could have put forward relevant evidence to explain the purpose and the context of these internal documents/emails. 26. The Learned Counsel for the `Appellant’ points out that the `Appellant’ had raised an objection that the “material adduced by FCPL before the Commission being pleadings before the arbitrators are disclosures made in contravention of the provisions of Section 42A of the Arbitration and Conciliation Act, 1996”, although, was noted in the `impugned order’ by the `CCI’, this objection, was dismissed by the `1st Respondent/CCI’ based on the reason that the proceedings before the `CCI’ and the `Arbitration Proceedings’ were mutually independent. 27. It is represented on behalf of the `Appellant’ that the `impugned order’ had failed to address the Appellant’s objection regarding the fact that `CAIT’s’ participation in the `Show Cause’ proceedings, inspite of the fact that `CAIT’ was a `stranger’ to the proceedings initiated based on `Show Cause Notice’ issued only to the `Appellant’ in violation of the established `Principles of Confidentiality’. 28. The Learned Counsel for the `Appellant’ submits that the `impugned order’ passed by the `1st Respondent/CCI’ had failed to deliberate pertaining to the fact whether it has the power to `revoke’ an `approval’ inspite of the objections raised by the `Appellant’ in the `Show Cause Notice’ proceedings, keeping in `abeyance’, an `Approval Order’ more than two years ago and initiating a fresh enquiry disregarding the limitation imposed as per Section 20 (1) of the Competition Act and the indifferent observations pertaining to `Fraud’, without any `prima facie’ as to how the alleged Misrepresentation/Suppression/ nondisclosures had an impact on the `1st Respondent’s assessment of the notified transactions all of which may have been given `due consideration’ in the presence of a `Judicial Member’ which the `1st Respondent/CCI’ is presently lacking and on these grounds, the `impugned order’ of the `1st Respondent/CCI’ is to be set aside by this `Tribunal’. 29. The Learned Counsel for the `Appellant’ comes out with an argument that the `1st Respondent/CCI’, being a `Statutory Authority’ is not to be permitted to improve its `case’ in `Appeal’ as per decision of the `Hon’ble Supreme Court’ in `Mohinder Singh Gill V Chief Election Commissioner, reported in 1978 1 SCC at page 405, wherein at paragraph 8 it is observed as under:

8.̏ The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose, J. in Gordhandas Bhanji (Commissioner of Police, Bombay V Gordhandas Bhanji, AIR 1952 SC 16 C127).

Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.

Orders are not like old wine becoming better as they grow older.”

30. The Learned Counsel for the `Appellant’ takes a stand that there is no inconsistency in `Appellant’s position taken before the `Arbitrational Tribunal’ and the `Constitutional Courts’ and the `1st Respondent/Competition Commission of India’. 31. Expatiating his argument, the Learned Counsel for the `Appellant’/`Amazon’ submits that the context of the `submissions’ made in the `Notification’ was to `notify’ a transaction based on the `Agreements’ executed between the `parties to the Combination’. But the context of `submissions’ advanced before the `Arbitration Tribunal’ was the `Violation of the Agreements’ between the `parties’. In reality, it is pointed out on behalf of the `Appellant’ that all `submissions’ made in the `Notification’ were vetted and approved by the common Learned Counsels for `FCPL’ and `FRL’ and it was a `conjoint effort’. 32. The Learned Counsel for the `Appellant’ proceeds to point out that at the time of filing of the said `Notification’, the `parties’ had not anticipated `any violation’ and this fact was omitted from `consideration’ in the `impugned order’ passed by the `1st Respondent/CCI’ and hence, the said order is vitiated. 33. Advancing his arguments, the Learned Counsel for the `Appellant’ points out that the `Notification’ filed under Section 6 (2) of the Competition Act is made with a view to enable the `1st Respondent/CCI’ to carry out an ex-anti assessment of the `notified Combination’. Further, the information submitted in the `Notification’ broadly relates to the `Agreement’ executed between the `Parties’ the rights being acquired under these `Agreements’ overlaps in the `Business Activities’ of the `Parties’ and the existing and potential vertical and complimentary linkages and market share of the `Parties’ in the relevant market(s). 34. According to the Appellant’s plea, there is no express requirement under `Form I’ for a notifying party to submit `emails’ exchanged between the parties and their Learned Counsel (such as the email dated 04.04.2019, being relied upon by the `1st Respondent/CCI’ in the `impugned order. Likewise, there is no requirement under Form I to disclose the factors considered in deciding the amount of consideration paid by an `Acquirer’. In reality, the `price of shares’ is not within the `purview of enquiry’ in as much as, it is based on `mutual agreement’ and `multiple Business Factors’. 35. The Learned Counsel for the `Appellant’ points out that the `Arbitrational Proceeding’ is an `International Commercial Arbitration’, as per Part I of the `Arbitration and Conciliation Act, 1996’ seated in New Delhi. In this connection, it is the contention of the Learned Counsel for the `Appellant’ that it was led to believe that the case being considered by the `1st Respondent/CCI’ based on `purported inconsistencies’ in the pleadings, set out before the `Arbitration Tribunal’ and those made before the `1st Respondent/CCI’. 36. It is the clear cut stand of the `Appellant’ that the `Arbitration Tribunal’ had considered the `submissions’ projected before by the `Parties’ before it, and held that the `Appellant’ has not taken any `contradictory stand’ before the `1st Respondent/CCI’ and the `Arbitration Tribunal’. 37. The Learned Counsel for the `Appellant’ by adverting to the complaint dated 25.03.2021 submits that the `2nd Respondent/FCPL’ mentioned that the submissions made by the `Appellant’ before the `Emergency Arbitrator’ and the `Indian Courts’ on the one hand and the submissions projected before the `1st Respondent/CCI’ indicate that the `Appellant’ misleading representations regarding its intention while seeking an `Approval’ from the `1st Respondent/CCI’. 38. The Learned Counsel for the `Appellant’ contends that the `Purview of Combination’ was disclosed to the `1st Respondent/CCI’. In this regard, it is the plea of the `Appellant’ that there was no `misrepresentation’ on Appellant’s part because of the fact that (i) The Warrants Transaction (whereby FCPL had acquired warrants amounting to 7.3% of the share capital of FRL on a fully diluted basis) and the FRL SHA were disclosed as constituting the background to the Appellant’s Investment (vide page 1 of the main Notification Form). (ii) Proposed Transaction II (whereby FCPL was acquiring an additional 2.52% shares in FRL) was identified as a condition precedent to the Appellant’s investment (iii) It was expressly mentioned in the response to query 5.1.1 which required details of acquisition or merger or amalgamation, as the case may be, with reference to relevant clause of Section 5, that the combination was notified solely because of FRL. (Para 14 of the notification form @ page 19 (Volume 1) of Convenience Compilation) and the combination was notified as a composite combination, (Paragraph 21 of the notification form at page 22 (Volume 1) of the Convenience Compilation). (iv) FRL was identified as a party to the notified combination and the only Material Entity. (Table 1 @ page 6 (Vol 1) of Convenience Compilation; Paragraph 37 of the response to the First RFI @ page 679 (Vol 3) of Convenience Compilation). (v) A copy of the FRL SHA was provided and all inter-connected rights arising from the FRL SHA, including in relation to FRL (and its retail assets) were disclosed in the table of rights produced in the main notification form as well as the subsequent submissions.” 39. The Learned Counsel for the `Appellant’ submits that the `impugned order’ of the `1st Respondent/CCI’ fails to exhibit which material particulars were suppressed/not disclosed by the Appellant in the `Notification’, which would otherwise have, even `ex facie’ changed the outcome of `1st Respondent’s Competitive Assessment’, in the teeth of information it now claims to have, since the contents of email dated 19.07.2019 (internal document relevant to the notified transaction) stood disclosed in the `Notification’ including (a) the structure of the transaction; (b) the amount and type of investment; (c) the board composition (d) the protective rights beg acquired by the Appellant (e) the restriction in relation to the transfer of shares of FCPL (f) the restriction in relation to the transfer of the Retail Assets of FRL (g) the Call option (h) the exit rights (i) the proposal to enter into commercial agreements contemporaneous with the investment, and (j) the advantages of the commercial agreements, were disclosed in the `Notification’. 40. According to the `Appellant’, in response to query 6.7 Form I, it was expressly mentioned that `the Proposed Combination’ pertains to the overall `Retail Market’ in India and the applicable `legal framework’ governing `Foreign Investment’ in the `Retail Sector’ was also disclosed. 41. It is represented on behalf of the `Appellant’ that in the main `Notification Form’ that “neither `FCRPL’ nor `FCL’ is engaged in `business activity’ relating to the Indian Market”. Moreover, it was expressly stated that `FRL’ was the `Flagship retail entity of the Promoter Group’. Apart from that, details of the `Appellant’s Affiliates’ engaged in Business Activity in India were provided and details of `Portfolio Companies’ and the `Subsidiaries’ of these `Portfolio Companies’ which were engaged in the `Retail Business’ , such as (Shopper’s Stop, More Retail Limited, Cloudtail and Appario) also, were furnished. 42. The Learned Counsel for the `Appellant’ takes a plea that it was submitted that the `Acquirer’ and target `Affiliates’ `undertake overlapping business activities in the Indian Retail Market’. Furthermore, `the only plausible relevant market in relation to the Proposed Combination is the overall retail market in India’. Also that, it was mentioned that `FRL’ was a registered `Seller’ on the Online Market Place’, operated by the `Appellant’s Affiliate’, including under the `Prime Now Program’ which permitted the customers to get products delivered from the local Kirana Stores or Neighbourhood Stores (including Big Bazaar Stores of FRL) within two hours of placing the order or at the preschedule time. 43. The contention of the `Appellant’ is that the details of all existing and contemplated Commercial Arrangements between the Appellant’s `Affiliates and `FRL Affiliates’, were disclosed in response to the query 6.5 of the `Form I’ and copies of all the five `Business Commercial Agreements’ were provided. Besides this, the details of the `rights’ accruing to the `Appellant’s `Affiliates’ under the `Business Commercial Agreements’ were disclosed along with the rationale behind these rights, and the justification for the exclusivity covenants contained in the `Business Commercial Agreements’ were also furnished. Continuing further, the `Competitive Assessment’ pertaining to the `Business Commercial Agreements’ was also presented as part of the `Notification Form’ and therefore, all information relating to the `Business Commercial Agreements’ which was relevant for the`1st Respondent assessment of the notified was furnished in the `Notification’. 44. The Learned Counsel for the `Appellant’ comes out with an argument it was expressly mentioned that `FCPL’ was not engaged in any `Business Activities’ in the `Retail Market’. In fact, the combined and incremental shares of the `Appellant’s Affiliates’ (`ASSPL’) and (`ARIPL’) and (`FRL’) including its subsidiaries were provided in regard to the `overall Indian Market’ as well as within the `Organized Segment’ and in each of the overlapping product Categories. 45. It is represented on behalf of the `Appellant’ that the details of `Commercial Agreements’ between the `Appellant’s Affiliates’ and `FRL’ and / or its `Affiliates’ Viz. Future Consumer Limited and Future Life Styled and Fashions Limited were furnished. Besides these, it was also submitted that the `Business Commercial Agreements’ were unlikely to cause any `AAEC’ as (a) sales made by Future Lifestyle and FRL through third party online channels was less than one percent (< 1%) in FY 2019 (b) the sales made through the online channel constituted less than one percent (<1%) of Future Consumer’s total revenue in FY 2019 and (c) wide availability of substitutes across various substitutable distribution channels (for instance, Maggi is available in local Kirana Stores, large format supermarkets such as Big Bazar, Reliance Fresh and online marketplaces such as Amazon, Flipkart, Big Basket. Blinkit, Insta Mart by Swiggy). Therefore, it is pointed out on behalf of the Appellant that the `Competitive Assessment’, presented to the `1st Respondent/CCI’ in the `Notification’ was carried out resting on an assumption of `Complete Integration’ between the `Appellant’s Affiliates’ and the `FRL and its Subsidiaries’. 46. The Learned Counsel for the `Appellant’ contends that it was evident from the queries posed by the `1st Respondent/CCI’ in the `RFIs’ dated 09.10.2019, 24.10.2019 (queries 2.8, 2.18, 2.21, 2.22 and 2.25) of the `1st RFI (vide page 648-650 of Vol 3 of Convenience Compilation) and (queries 2.2, 2.3, 2.5, 2.6, 2.9 and 2.10 of `2nd RFI (vide page 721 of Vol 3 of convenience Compilation)’ as well as Part VI of Form I, read with notes to Form I that the `1st Respondent/CCI’ that the Commission had proceeded on the assumption of `Complete Integration’ between the `Appellant’ and the target group irrespective of the immediate parties to the Combination. 47. The Learned Counsel for the `Appellant’ submits that the `impugned order’ of the `1st Respondent/CCI’, is `untenable and bad in Law’ because of the fact that it is passed in the absence of a `Judicial Member’, in complete disregard to the observations made by the `Hon’ble Supreme Court India in State of Gujarat V Utility Users Welfare Association, 2018 (6) SCC 21, as relied upon by the Hon’ble High Court of Delhi in the matter of `Mahindra Electric Mobility Limited and Another V Competition Commission of India and Others, reported in 2019, (SCC Online Del 8032). In this regard, it is brought to the notice of this `Tribunal’ that the said `Judgment’ was not stayed by the Hon’ble Supreme Court inspite of an `Appeal’ preferred by the `Union of India and the 1st Respondent ! CCI’, which among other things, also prayed for an interim relief of staying the operation of the direction pertaining to the appointment of a `Judicial Member’. 48. The Learned Counsel for the `Appellant’ contends that the `issue’ of whether the `1st Respondent/CCI’ actually assessed notified combination in the context of `FRL’ being a Coupons Issuer’ or as a player in the `Indian Retail Market’, can be decided on the basis of report prepared by the `1st Respondent/CCI’ case Team which was presented to the `Members of the 1st Respondent/CCI’. 49. The Learned Counsel for the `Appellant’ points out that the `1st Respondent/CCI’s stated position is that it was robbed of its jurisdiction to conduct an `AAEC analysis’ because the `disclosures’ made by the `Appellant’ were accompanied by `Caveats’. 50. According to the `Appellant’, the `1st Respondent/CCI’ had argued that though information pertaining to `FRL’ was provided, it was submitted with a `Caveat’ that the `Appellant’ was “not acquiring any indirect shareholding or control over `FRL”. Further, it was stated that `FCPL’ was an Indian owned and controlled company and the `IOCC’ Structure was disclosed to the `1st Respondent/CCI’ and as per the terms of `FDI Policy’ any downstream investment made by an Indian Company which had received `Foreign Investment’ but is owned and controlled by `Resident Indian Citizens (such as `FCPL) as not considered while calculating indirect `Foreign Investment’. As such, an Indian owned and controlled company’ structure, in the `eye of law’ does not constitute and an `Indirect Foreign Shareholding’ in the downstream entity as long as the recipient of the `Foreign Investment’ (which is `FCPL’ in the instant case), is owned and controlled by `Resident Indian Citizens. In as much as the `Appellant’ does not exercise any control over `FCPL’, it cannot be said to exercise control over `FRL’. In fact, this is the position prevailing under the `FDI Policy’, `NDI rules’, and they are binding on the `CCI’, 51. The Learned Counsel for the `Appellant’ submits that the characterization of the rights as `Investor Protection Rights’ is appropriate and this was in accordance with `FCPL SHA’ which itself characterized some of these rights as `Investor Protective’ matters (vide Section 8 read with Schedule IX of `FCPL SHA’ (Vol I Page 179 of Convenience Compilation). Moreover the `FCPL SHA’ makes it clear that the `Appellant’ would not control the affairs of either `FCPL’ or `FRL’ (vide Clause 10.1, 16.1 in regard to `FCPL’ and Clause 15.17 in relation to `FRL’ (vide Vol I pages 185, 209 and 210). In fact, the `Appellant’ does not exercise control over the day-to-day operations of `FCPL’ and therefore, cannot be said to have acquired control over `FCPL’ (or) by `extension of `FRL’. 52. The Learned Counsel for the `Appellant’ contends that Section 26 of the `FCPL SHA’ further states that the `Appellant’ shall not be deemed to be a `Promoter’ of `FCPL’ or `FRL’ until the `Call Option’ is exercised. With specific reference to the SEBI (Substantial Acquisition of Shares and takeover (Regulations), which defines a `Promoter’ with reference to SEBI (issue of Capital and Disclosure Requirements (Regulations) , wherein a `Promoter’ is defined as `shall include a person’ … (2) control over the affairs directly or indirectly whether as a shareholder or director or otherwise’ and the term `Control’ is defined as `Control includes the right to a point majority of the Directors or to control the Management or Policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders’ agreement or voting agreements or in any other manner. This is the widest definition of `Control’ which is echoed in the explanation (b) to Section 5 of the Competition Act, 2002, which defines `Control’. 53. The contention of the `Appellant’ is that until the `Call option’ is exercised by the `Appellant’ it cannot be said the Appellant has acquired Control over `FCPL’ or `FRL’. Indeed, the `Call option’, was negotiated so that the `Appellant may have a chance to acquire control in future, if and when the `Indian Law’ permit the same and such an exercise of the `Call option’ will be the subject matter of a future combination and further that there was a lockin period of 3 years from the effective date which would lapse on 24.12.2022 and hence, the question of any `control’ was rendered an ineffectual one. 54. The Learned Counsel for the `Appellant’ points out that there was no `caveat’ in the submissions made in `Notification’ pertaining to the `Business Commercial Agreements’ and per contra, there was an endorsement that the `1st Respondent/CCI’, is required to analyse the `Business Commercial Agreements’ in its `Competitive Assessment’ because they are between the parties to the `Notified Combination’ and their `Affiliates’. 55. Furthermore, the `Form I’ (especially with reference to queries 6.5.5 and 6.6) requires the `1st Respondent/CCI’ to consider the cumulative impact of the `BCAs’ together with the `Notified Combination’, in its `Competitive Assessment’, whether or not the `BCAs’ are part of the `Notified Combination’ and this is because of the fact that the `BCAs’ are between the parties to the `Notified Combination’ and their `Affiliate Entities’. As such, it is not correct to suggest that the `1st Respondent/CCI’ would or would not analyse the `BCAs’ depending on whether or not they are stated to be part of the `Notified Combination’. In fact, the `Appellant’ had mentioned in the main `Notification’ that the `BCAs’ are being disclosed `with a view to assist the `Commission’ in its assessment of the `Proposed Combination’. 56. In short, the relevant facts the `1st Respondent/CCI’ should have considered and considered are the rights accruing to the `Appellant’s Affiliates’ under these `BCAs’ which stood disclosed. 57. The Learned Counsel for the `Appellant’ submits that the `1st Respondent/CCI’s own practice is that it necessarily disregards `caveats’ or `qualified submissions’ made by the parties while carrying out `Competitive Assessment’ of a `Notified Combination’. 58. The Learned Counsel for the `Appellant’ contends that there is `No Fraud’ in the present case and in reality, the `Finding of Fraud’ necessarily requires a decision that the information/ documents purportedly `suppressed/undisclosed’ as a `material impact’ on the assessment of the Combination. In this connection, the Learned Counsel for the `Appellant’ cites the decision of the `Hon’ble Supreme Court in the matter of `Electrosteel Castings Limited V UV Asset Reconstruction, reported in 2021 SCC OnLine SC 1132, wherein the Hon’ble Supreme Court held that `as per the settled proposition of law, mere mentioning and using the word `Fraud’/`Fraudulent’ without any material particulars, would not amount to pleading of `Fraud’. 59. The Learned Counsel for the `Appellant’ takes a plea that the `impugned order’ passed by the `1st Respondent/CCI’ does not disclose what / which `material’ particular(s) were undisclosed/suppressed by the `Appellant in the `Notification’. 60. In regard to the email dated 19.07.2019, it is represented on behalf of the `Appellant’ the Appellant was under the `Bonafide Belief’ that the contents of this email should disclose in the `Notification’, and that the said email had contained a summary of the agreements that the `Appellant’ proposed to execute and copies of these agreements were provided along with the `Notification’, and as such, `no case of fraud’ can ever be said to be made out merely on account of failure to disclose an `information / document’ that was purportedly required to be disclosed. 61. The Learned Counsel for the `Appellant’ adverts to the decision of Hon’ble Supreme Court in the matter of `Bhaurao Dagdu Paralkar V State of Maharashtra and Others, reported in 2005, 7 SCC 605, the aspect of `fraud’ in public Law and `fraud’ in private Law was differentiated an it was held at Paragraph 12 that (i) fraud in relation to a statute must be a colourable transaction to evade the provisions of a statute; (ii) it must result in exercise of jurisdiction which otherwise would not have been exercised; and (iii) the non-disclosure of a fact not required by a statute to be disclosed would not amount to fraud. 62. The Learned Counsel for the `Appellant’ contends that the internal emails dated back to 2018 are not relevant as they contemplated a different Investment Structure Viz. a direct investment in `FRL’ under the `Foreign Portfolio Investment Route, which was not ultimately undertaken in the transaction notified to the `1st Respondent/CCI’. 63. Yet another plead of the Appellant’s side is that the email dated 04.04.2019, was an email exchanged between the Learned Counsel for the `Appellant’ and the Future Group and there is no requirement under query 8.8 (or any other part of the Form I to disclose legally `privileged communication’ between the Learned Counsels of the parties to a `Combination’. 64. Furthermore, it is the stand of the `Appellant’ there is no requirement under Form I of the Competition Act, 2002, to disclose the factors considered in deciding the sum of consideration paid by the `Acquirer’. However, it was disclosed by the `Appellant’ FCPL’s underlying shareholding in `FRL’, was also considered by the `Appellant’ in deciding the value of the `Proposed Investment’. 65. The Learned Counsel for the `Appellant’ submits that there was `no requirement’ to disclose `any future intent’ of the `Appellant’ to acquire a foot-in-the-door in `Retail Sector’, as it was not the subject matter of the present `Combination’. In fact, the expression `foot-in-the-door’ reflected in the emails/internal documents refers to the `Call option’ which provides the Appellant an `Option’ in the future (not an obligation) to become the single largest Shareholder in `FRL’, only when the applicable `FDI Norms’ allow. 66. The emphatic stand of the Appellant is that the `email’ dated 19.07.2019 acknowledges that the `Appellant’ would have exercised control over the affairs of `FRL’ only upon the exercise of the `Call option’ which, in turn, was subject to several conditions including the occurrence of the change in Law event. 67. In this regard, the Learned Counsel for the `Appellant’ refers to a decision in Reliance/ Bharti AXA (vide Combination Registration No.C-2011/0/1), wherein AXA had an `Option’ to acquired up to 24% shares of Bharti AXA Life Insurance and Bharti AXA General Insurance and when FDI Regulations permit, the 1st Respondent/CCI itself had observed that `such an acquisition by AXA at a later date is not part of the present determination and shall be dealt accordingly as per the applicable laws at that time’. Also that, it was mentioned expressly in the `Notification’ that any `Acquisition of Shares’ in `FRL’ in future, would be notified to the `1st Respondent/CCI’ in the later `Notification’. 68. The Learned Counsel for the `Appellant’ puts forward an argument that the bundle of rights acquired by the `Appellant’ has part of the notified transaction was reviewed by `EA’ and `AT’ and none had concluded that these rights amount to control over the affairs of `FRL’. In this connection, it is represented by the `Appellant’ that `EA’ order was upheld by the Hon’ble Supreme Court of India as per Section 17 of the `Arbitration and Conciliation Act, 1996, through an order dated 06.08.2021. As a matter of fact, the Arbitration Tribunal’s order, is an `order of court’, as per Section 17 of the `Arbitration and Conciliation Act, 1996’. As such, the aspect of whether or not the bundle of rights accruing to the `Appellant’ amounted to controlling the affairs of `FRL’ was the legal submission made by the `Appellant’ which `per se’ cannot amount to `Misrepresentation of Fact’ or `Fraud’. 69. The Learned Counsel for the `Appellant’ points out that the `Appellant’ had highlighted the `synergies’ envisaged in regard to the payments market in response to the specific query 2.13 (c) of the RFI dated 09.10.2019, which referred to a statement by Mr. Kishore Biyani (Promoter of FCPL and FRL), which referred to the `payments ecosystem’. However, the `1st Respondent/CCI’ had relied on the response of the `Appellant’ in a out of context manner to allege that when asked as to how the `Appellant’ envisaged a part of the `Retail Ecosystem’, the `Appellant’ gave misleading explanations about the business of `FCPL’ and other `Amazon Portfolio Companies’ in the payments market. 70. The Learned Counsel for the ` Appellant’ contends that the `1st Respondent/CCI’ had failed to consider that `FRL SHA’ was disclosed in the 1st stage of the main `Notification’ Form as constituting the background to the `Appellant’s Investment’. 71. The Learned Counsel for the `Appellant’ submits that the `1st Respondent/CCI’ had failed to consider that Section 43A of the Competition Act, 2002, is applicable where a party fails to notify a transaction (Viz., a merger, amalgamation or acquisition) in terms of Section 2 (a) that constitute a `combination’ as per Section 5 of the Competition Act, 2002. In short, what is required to be notified to the `1st Respondent/CCI’ is the transaction which constitutes a `combination’ and not an argument executed in furtherance of the said transaction, per se. In any event, the `Appellant’ had provided copies of `FRL SHA’, the five `BCAs’ to the `1st Respondent/CCI’ along with the `Notification’ and disclosed all information pertaining to the rights accruing to the `Appellant’ under the `FRL SHA’ as well as `BCAs’ and urged the `Commission’ to assess the notified combination in the light of such disclosures. In any case, neither the `FRL SHA’ nor the `BCAs’ were given effect to before the receipt of `1st Respondent/CCI’s approval. 72. The Learned Counsel for the Appellant points out that the Competition Act 2002 does not contemplate any power for the `Revocation Of Approval’ granted by the `1st Respondent/CCI’ as per Section 31 (1) of the Competition Act, 2002. Further, it is projected on the side of the `Appellant’ that in the instant case, there is no `Misstatement of False Information’ or `Misrepresentation’ that was material to the `1st Respondent/CCI’s assessment of the `Notified Combination’. 73. The Learned Counsel for the `Appellant’ urges that the `residuary powers’ conferred upon the `1st Respondent/CCI’s, as per Section 45 (2) of the Competition Act, 2002, were not available to the Commission, in the instant case. In this regard, the Learned Counsel for the `Appellant’ refers to the decision of the Hon’ble Supreme Court in Sukhdev Singh V Bhagatram Sardar Singh, reported in 1975 1 SCC, at page 421, Spl pages 433, 438 and 439, wherein at paragraph 15 and 33, it is observed as under:

15. ”The words “rules” and “regulations” are used in an Act to limit the power of the statutory authority. The powers of statutory bodies are derived, controlled and restricted by the statutes which create them and the rules and regulations framed thereunder. Any action of such bodies in excess of their power or in violation of the restrictions placed on their powers is ultra vires. The reason is that it goes to the root of the power of such corporations and the declaration of nullity is the only relief that is granted to the aggrieved party.

33. There is no substantial difference between a rule and a regulation in as much as both are subordinate legislation under powers conferred by the statute. A regulation framed under a statute applies uniform treatment to every one or to all members of some group or class. The Oil and Natural Gas Commission, the Life Insurance Corporation and Industrial Finance Corporation are all required by the statute to frame regulations inter alia for the purpose of the duties and conduct and conditions of service of officers and other employees. These regulations impose obligation on the statutory authorities. The statutory authorities cannot deviate from the conditions of service. Any deviation will be enforced by legal sanction of declaration by courts to invalidate actions in violation of rules and regulations. The existence of rules and regulations under statute is to ensure regular conduct with a distinctive attitude to that conduct as a standard. The statutory regulations in the cases under consideration give the employees a statutory status and impose restriction on the employer and the employee with no option to vary the conditions. An ordinary individual in a case of master and servant contractual relationship enforces breach of contractual terms. The remedy in such contractual relationship of master and servant is damages because personal service is not capable of enforcement. In cases of statutory bodies, there is no personal element whatsoever because of the impersonal character of statutory bodies. In the case of statutory bodies it has been said that the element of public employment or service and the support of statute require observance of rules and regulations. Failure to observe requirements by statutory bodies is enforced by courts by declaring dismissal in violation of rules and regulations be void. This Court has repeatedly observed that whenever a man’s rights are affected by decision taken under statutory powers, the Court would presume the existence of a duty to observe the rules of natural justice and compliance with rules and regulations imposed by statute.”

74. The Learned Counsel for the Appellant contends that the `Power of Recall’, `Review’ or `Revocation’ are `Prescriptive Functions’, to be specified by the `Parliament’ in its `Primary Legislation’ and further that there is no `Power of Revocation’, contemplated under the `Statute’. 75. The Learned Counsel for the `Appellant’ submits that in `Law’, the `General Provisions’ are not to be used where a specific provision was enacted with a specific purpose in mind, as per decision of the `Hon’ble Supreme Court’ in J K Cotton Spinning Weaving Mills V State of Uttar Pradesh, reported in (961) 3 SCR 185, at paragraphs 8 and 9, wherein it is observed as under:

8.̏ It is hardly necessary to mention that this rule in Clause 23 was made with a definite purpose. The provision here is very similar to Section 33 of the Industrial Disputes Act before its amendment, though there are some differences. It is easy to see however that the rule making authority in making this rule was anxious to prevent as far as possible the recrudescense of fresh disputes between employers and workmen when some dispute was already pending and that purpose will be directly defeated if a fresh dispute is allowed to be raised under Clause 5(a) in the very cases where Clause 23 in terms applies.

9. There will be complete harmony however if we hold instead that Clause 5(a) will apply in all other cases of proposed dismissal or discharge except where an inquiry is pending within the meaning of Clause 23. We reach the same result by applying another well known rule of construction that general provisions yield to special provisions. The learned Attorney-General seemed to suggest that while this rule of construction is applicable to resolve the conflict between the general provision in one Act and the special provision in another Act, the rule cannot apply in resolving a conflict between general and special provisions in the same legislative instrument. This suggestion does not find support in either principle or authority. The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers and judges but springs from the common understanding of men and women that when the same person gives two directions one covering a large number of matters in general and another to only some of them his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier direction should have effect. In Pretty v. Solly (quoted in Craies on Statute Law at p.m. 206, 6th Edition) Romilly, M.R. mentioned the rule thus: “The rule is, that whenever there is a particular enactment and a general enactment in the same statute and the latter, taken in its most comprehensive sense, would overrule the former, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply”. The rule has been applied as between different provisions of the same statute in numerous cases some of which only need be mentioned: De Winton v. Brecon (28 LJ Ch 598), Churchill v. Crease (5 Bing 177), United States v. Chase (135 US 255) and Carroll v. Greenwich Ins. CO. (199 US 401).”

In effect, the plea of the `Appellant’ is that Section 45 of the Competition Act, 2002, does not provide for `Revocation of Approvals’. 76. The Learned Counsel for the `Appellant’ fervently advances an argument that there is no power to keep the `Approval Order’ passed by the `1st Respondent/CCI’ in abeyance, on account of the violation of Section 43 A of the Competition Act, 2002. That apart, an `order’ to keep an `Approval’ in `Abeyance’ and `Reassess’ the `Combination’ after receipt of `Notice’ from the `Appellant’ in Form II is totally contrary to the `Rule of ex ante Analysis’ and it is barred by the one year period of limitation, as per proviso to Section 20(1) of the Competition Act, 2002, as the `FCPL SHA’ came into effect on 19.12.2019 (over two years’ before). 77. The Learned Counsel for the `Appellant’ contends that there is no power enjoined up on the `1st Respondent/CCI’s to direct the filing of Form II as combined share of parties was less than 1%. In this connection, the Learned Counsel for the `Appellant’ comes out with a stand that between the Financial Year 2016 to 2017, Financial Year 2018 to 2019, the combined share of the `Appellant’s Affiliates ASSPL and FRL’ in the overall Indian retail market was less than 1%. 78. The Learned Counsel for the `Appellant’ submits that the `Power to Approve’ does not include the `Incidental Power’ to `Revoke’ and refers to the decision of the `Hon’ble Supreme Court’ in Indian National Congress (I) V Institute of Social Welfare, reported in 2002 5 SCC, page 685, wherein at paragraphs 39 to 41, it is observed as follows:

39.̏We have already extensively examined the matter and found that Parliament consciously had not chosen to confer any power on the Election Commission to de-register a political party on the premise it has contravened the provisions of sub-section (5) of Section 29A. The question which arises for our consideration is whether in the absence of any express or implied power, the Election Commission is empowered to cancel the registration of a political party on the strength of the provisions of Section 21 of the General Clauses Act. Section 21 of the General Clauses Act runs as under:

21. Power to issue, to include power to add to amend, vary or rescind, notification, orders, rules or bye-laws. Where by any central Act or regulation, a power to issue notifications, orders, rules or bye-laws is conferred then that power includes a power exercisable in the like manner and subject to the like sanction, and conditions (if any), to add to, amend, vary or rescind any notifications, orders, rules or bye-laws so issued.”

40. On perusal of Section 21 of the General Clauses Act, we find that the expression ‘order’ employed in Section 21 shows that such an order must be in the nature of notification, rules and bye-laws etc. The order which can be modified or rescinded on the application of Section 21 has to be either executive or legislative in nature. But the order which the Commission is required to pass under Section 29A is neither a legislative nor an executive order but is a quasi-judicial order. We have already examined this aspect of the matter in the foregoing paragraph and held that the functions exercisable by the Commission under Section 29A is essentially a quasi-judicial in nature and order passed thereunder is a quasi-judicial order. In that view of the matter, the provisions of Section 21 of the General Clauses Act cannot be invoked to confer powers of de-registration/cancellation of registration after enquiry by the Election Commission. We, therefore, hold that Section 21 of the General Clauses Act has no application where a statutory authority is required to act quasi-judicially.

41. It may be noted that the Parliament deliberately omitted to vest the Election Commission of India with the power to de-register a political party for non-compliance with the conditions for the grant of such registration. This may be for the reason that under the Constitution the Election Commission of India is required to function independently and ensure free and fair elections. An enquiry into non-compliance with the conditions for the grant of registration might involve the Commission in matters of a political nature and could mean monitoring by the Commission of the political activities, programmes and ideologies of political parties. This position gets strengthened by the fact that on 30th June, 1994 the Representation of the People (Second Amendment) Bill, 1994 was introduced in the Lok Sabha proposing to introduce Section 29-B whereunder a complaint to be made to the High Court within whose jurisdiction the main office of a political party is situated for cancelling the registration of the party on the ground that it bears a religious name or that its memorandum or rules and regulations no longer conforming the provisions of Section 29­A (5) or that the activities are not in accordance with the said memorandum or rules and regulations. However, this bill lapsed on the dissolution of the Lok Sabha in 1996, (See p. 507 of “How India Votes : Election Laws, Practice and Procedure” by V.S. Rama Devi and S.K. Mendiratta).”

79. The Learned for the `Appellant’ submits that the `Approval Order’ (under section 31 (1) of the Competition Act, 2002), passed by the `1st Respondent/CCI’ is a `Quasi-judicial Order’, as it requires the `1st Respondent/CCI’ to form an `opinion’ whether a `notified Combination’ has or is likely to have any `AAEC’ in the relevant market based on consideration of numerous factors mentioned in Section 20 (4) of the Competition Act, 2002. 80. The Learned Counsel for the `Appellant’ contends that the `Penalty’ of INR 200 Crores imposed in the `impugned order’ is without any basis or justification and under the 1st Respondent/CCI had imposed a maximum penalty of INR 5 Crores in approximately 40 cases for `Breach of Section 43A of the Competition Act, 2002’, during the past eleven years period. 81. The Learned Counsel for the `Appellant’ refers to the decision of the Hon’ble Supreme Court in Excel Crop Care V Union of India and Ors., reported in (2017) 8 SCC, page 47, Spl. pages 113 and 114, wherein at paragraph 109, it is observed as under:

109.  ̏At this point, I would like to emphasize on the usage of the phrase ‘as it may deem fit’ as occurring under Section 27 of the Act. At the outset this phrase is indicative of the discretionary power provided for the fining authority under the Act. As the law abhors absolute power and arbitrary discretion, this discretion provided under Section 27 needs to be regulated and guided so that there is uniformity and stability with respect to imposition of penalty. This discretion should be governed by rule of law and not by arbitrary, vague or fanciful considerations. Here we may deal with two judgments which may be helpful in deciding the concerned issue. In Dilip N. Shrof v. Joint CIT (2007) 6 SCC 329, this Court while dealing with the imposition of the penalty has observed that: (SCC pp. 353-54, para 42)

42. The legal history of section 271(1)(c) of the Act traced from the 1922 Act prima facie shows that the Explanations were applicable to both the parts. However, each case must be considered on its own facts. The role of the Explanation having regard to the principle of statutory interpretation must be borne in mind before interpreting the aforementioned provisions. Clause (c) of sub-section (1) of section 271 categorically states that the penalty would be leviable if the assessee conceals the particulars of his income or furnishes inaccurate particulars thereof. By reason of such concealment or furnishing of inaccurate particulars alone, the assessee does not ipso facto become liable for penalty. Imposition of penalty is not automatic. Levy of penalty is not only discretionary in nature but such discretion is required to be exercised on the part of the Assessing Officer keeping the relevant factors in mind. Some of those factors apart from being inherent in the nature of penalty proceedings as has been noticed in some of the decisions of this court, inheres on the face of the statutory provisions. Penalty proceedings are not to be initiated, as has been noticed by the Wanchoo Committee, only to harass the assesse. The approach of the Assessing Officer in this behalf must be fair and objective.”

(emphasis supplied)

82. The Learned Counsel for the `Appellant’ raises an argument that the `1st Respondent/CCI’ had failed to take into account about the aspect that `FRL SHA’ or `BCAs’ came in to effect before the `Approval Order’ and the `Investment’ made by the `Appellant’ had already flown down to `FRL’ and `Appellant, the `Appellant’ is actually a party suffering monetary damages due to the `Contractual Breaches’ by the `Future Group’. Appellant’s Decisions: 83. The Learned Counsel for the Appellant relies on the decision of the Hon’ble Supreme Court in State of NCT of Delhi and another V Sanjeev Alias Bittoo (2005) 5 SCC at page 181 at Spl. page 190, wherein at paragraph 15, it is observed as under:

15.̏ One of the points that falls for determination is the scope for judicial interference in matters of administrative decisions. Administrative action is stated to be referable to broad area of Governmental activities in which the repositories of power may exercise every class of statutory function of executive, quasi-legislative and quasi-judicial nature. It is trite law that exercise of power, whether legislative or administrative, will be set aside if there is manifest error in the exercise of such power or the exercise of the power is manifestly arbitrary (See State of U.P. and Ors. v. Renusagar Power Co. and Ors., AIR (1988) SC 1737. At one time, the traditional view in England was that the executive was not answerable where its action was attributable to the exercise of prerogative power. Professor De Smith in his classical work “Judicial Review of Administrative Action” 4th Edition at pages 285-287 states the legal position in his own terse language that the relevant principles formulated by the Courts may be broadly summarized as follows. The authority in which discretion is vested can be compelled to exercise that discretion, but not to exercise it in any particular manner. In general, discretion must be exercised only by the authority to which it is committed. That authority must genuinely address itself to the matter before it; it must not act under the dictates of another body or disable itself from exercising discretion in each individual case. In the purported exercise of its discretion, it must not do what it has been forbidden to do, nor must it do what it has not been authorized to do. It must act in good faith, must have regard to all relevant considerations and must not be influenced by irrelevant considerations, must not seek to promote purposes alien to the letter or to the spirit of the legislation that gives it power to act, and must not act arbitrarily or capriciously. These several principles can conveniently be grouped in two main categories: (i) failure to exercise a discretion, and (ii) excess or abuse of discretionary power. The two classes are not, however, mutually exclusive. Thus, discretion may be improperly fettered because irrelevant considerations have been taken into account, and where an authority hands over its discretion to another body it acts ultra vires.”

84. The Learned Counsel for the Appellant cites the decision of the Supreme Court in Kishore Samrite V State of Uttar Pradesh (2013), 2 SCC, Page 398, at Spl. pgs: 421 and 422, wherein at paragraph 32 to 32.8, it is observed as under:

32.̏ The cases of abuse of the process of court and such allied matters have been arising before the Courts consistently. This Court has had many occasions where it dealt with the cases of this kind and it has clearly stated the principles that would govern the obligations of a litigant while approaching the court for redressal of any grievance and the consequences of abuse of the process of court. We may recapitulate and state some of the principles. It is difficult to state such principles exhaustively and with such accuracy that would uniformly apply to a variety of cases. These are:

(32.1) Courts have, over the centuries, frowned upon litigants who, with intent to deceive and mislead the Courts, initiated proceedings without full disclosure of facts and came to the courts with ‘unclean hands’. Courts have held that such litigants are neither entitled to be heard on the merits of the case nor entitled to any relief.

(32.2) The people, who approach the Court for relief on an ex parte statement, are under a contract with the court that they would state the whole case fully and fairly to the court and where the litigant has broken such faith, the discretion of the court cannot be exercised in favour of such a litigant.

(32.3) The obligation to approach the Court with clean hands is an absolute obligation and has repeatedly been reiterated by this Court.

(32.4) Quests for personal gains have become so intense that those involved in litigation do not hesitate to take shelter of falsehood and misrepresent and suppress facts in the court proceedings. Materialism, opportunism and malicious intent have over­shadowed the old ethos of litigative values for small gains.

(32.5) A litigant who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands is not entitled to any relief, interim or final.

(32.6) The Court must ensure that its process is not abused and in order to prevent abuse of process the court, it would be justified even in insisting on furnishing of security and in cases of serious abuse, the Court would be duty-bound to impose heavy costs.

(32.7) Wherever a public interest is invoked, the Court must examine the petition carefully to ensure that there is genuine public interest involved. The stream of justice should not be allowed to be polluted by unscrupulous litigants.

(32.8) The Court, especially the Supreme Court, has to maintain strictest vigilance over the abuse of the process of court and ordinarily meddlesome bystanders should not be granted “visa”. Many societal pollutants create new problems of unredressed grievances and the Court should endure to take cases where the justice of the lis well justifies it (Refer : Dalip Singh V State of Uttar Pradesh (2010) 2 SCC 114; Amar Singh V Union of India (2011) 7 SCC 69; and State of Uttaranchal V Balwant Singh Chaufal (2010) 3 SCC 402.”

85. The Learned Counsel for the Appellant adverts to the decision of the Hon’ble Supreme Court in Amar Singh V Union of India, reported in (2011) (7) SCC, Page 69, at Spl. pages 87 to 89, wherein at paragraphs 53 to 61, it is observed as under:

53.̏ Courts have, over the centuries, frowned upon litigants who, with intent to deceive and mislead the courts, initiated proceedings without full disclosure of facts. Courts held that such litigants have come with “unclean hands” and are not entitled to be heard on the merits of their case.

54. In Dalglish v. Jarvie10 the Court, speaking through Lord Langdale and Rolfe B., laid down: (Mac & G p.231: ER p. 89)

“It is the duty of a party asking for an injunction to bring under the notice of the Court all facts material to the determination of his right to that injunction; and it is no excuse for him to say that he was not aware of the importance of any facts which he has omitted to bring forward.”

55. In Castelli v. Cook11, Vice-Chancellor Wigram, formulated the same principles as follows: (Hare p. 94: ER p. 38)

“… a plaintiff applying ex parte comes under a contract with the Court that he will state the whole case fully and fairly to the Court. If he fails to do that, and the Court finds, when the other party applies to dissolve the injunction, that any material fact has been suppressed or not property brought forward, the plaintiff is told that the Court will not decide on the merits, and that, as he has broken faith with the Court, the injunction must go.”

56. In Republic of Peru v. Dreyfus Bros. & Co.12 Kay, J. reminded us of the same position by holding: (LT p. 803)

“…If there is an important misstatement, speaking for myself, I have never hesitated, and never shall hesitate until the rule is altered, to discharge the order at once, so as to impress upon all persons who are suitors in this Court the importance of dealing in good faith with the Court when ex parte applications’ are made.”

57. In one of the most celebrated cases upholding this principle, in the Court of Appeal in R. v. Kensington Income Tax Commissioner ex p Princess de Polignac13 K.B. Scrutton, L.J. formulated as under: (KB p. 514)

“…and it has been for many years the rule of the Court, and one which it is of the greatest importance to maintain, that when an applicant comes to the Court to obtain relief on an ex parte statement he should make a full and fair disclosure of all the material facts – facts, now law. He must not misstate the law if he can help it – the court is supposed to know the law. But it knows nothing about the facts, and the applicant must state fully and fairly the facts, and the penalty by which the Court enforces that obligation is that if it finds out that the facts have been fully and fairly stated to it, the Court will set aside any action which it has taken on the faith of the imperfect statement.”

58. It is one of the fundamental principles of jurisprudence that litigants must observe total clarity and candour in their pleadings and especially when it contains a prayer for injunction. A prayer for injunction, which is an equitable remedy, must be governed by principles of `uberrima fides”.

59. The aforesaid requirement of coming to Court with clean hands has been repeatedly reiterated by this Court in a large number of cases. Some of which may be noted, they are: Hari Narain v. Badri Das – AIR 1963 SC 1558, Welcome Hotel v. State of A.P. – (1983) 4 SCC 575, G. Narayanaswamy Reddy v. Government of Karnataka – (1991) 3 SCC 261, S.P. Chengalvaraya Naidu v. Jagannath (1994) 1 SCC 1, A.V. Papayya Sastry v. Government of A.P. – (2007) 4 SCC 221, Prestige Lights Limited v. SBI – (2007) 8 SCC 449, Sunil Poddar v. Union Bank of India – (2008) 2 SCC 326, K.D.Sharma v. SAIL – (2008) 12 SCC 481, G. Jayashree v. Bhagwandas S. Patel (2009) 3 SCC 141, Dalip Singh v. State of U.P. (2010) 2 SCC 114.

60. In the last noted case of Dalip Singh (supra), this Court has given this concept a new dimension which has a far reaching effect. We, therefore, repeat those principles here again:

“(a) For many centuries Indian society cherished two basic values of life i.e. “satya”(truth) and “ahimsa (non­violence), Mahavir, Gautam Buddha and Mahatma Gandhi guided the people to ingrain these values in their daily life. Truth constituted an integral part of the justice-delivery system which was in vogue in the pre-independence era and the people used to feel proud to tell truth in the courts irrespective of the consequences. However, post-independence period has seen drastic changes in our value system. The materialism has overshadowed the old ethos and the quest for personal gain has become so intense that those involved in litigation do not hesitate to take shelter of falsehood, misrepresentation and suppression of facts in the court proceedings.

(b) In the last 40 years, a new creed of litigants has cropped up. Those who belong to this creed do not have any respect for truth. They shamelessly resort to falsehood and unethical means for achieving their goals. In order to meet the challenge posed by this new creed of litigants, the courts have, from time to time, evolved new rules and it is now well established that a litigant, who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands, is not entitled to any relief, interim or final.”

However, this Court is constrained to observe that those principles are honoured more in breach than in their observance.

61. Following these principles, this Court has no hesitation in holding that the instant writ petition is an attempt by the petitioner to mislead the Court on the basis of frivolous allegations and by suppression of material facts as pointed out and discussed above. In view of such incorrect presentation of facts, this court had issued notice and also subsequently passed the injunction order which is still continuing.”

86. The Learned Counsel for the Appellant seeks in aid of the decision of the Hon’ble Supreme Court in Dalip Singh V State of Uttar Pradesh, reported in (2010) 2 SCC, Page 114 at Spl. pgs: 116 and 117, wherein it is observed as under:

“(a) For many centuries Indian society cherished two basic values of life i.e. “satya”(truth) and “ahimsa (non-violence), Mahavir, Gautam Buddha and Mahatma Gandhi guided the people to ingrain these values in their daily life. Truth constituted an integral part of the justice-delivery system which was in vogue in the pre-independence era and the people used to feel proud to tell truth in the courts irrespective of the consequences. However, post-independence period has seen drastic changes in our value system. The materialism has overshadowed the old ethos and the quest for personal gain has become so intense that those involved in litigation do not hesitate to take shelter of falsehood, misrepresentation and suppression of facts in the court proceedings.

(b) In the last 40 years, a new creed of litigants has cropped up. Those who belong to this creed do not have any respect for truth. They shamelessly resort to falsehood and unethical means for achieving their goals. In order to meet the challenge posed by this new creed of litigants, the courts have, from time to time, evolved new rules and it is now well established that a litigant, who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands, is not entitled to any relief, interim or final.”

87. The Learned Counsel for the Appellant refers to the decision of Hon’ble Supreme Court in Union of India and Ors. V Cipla Ltd. and Ors. (2007) 5 SCC, wherein at paragraph 150, it is observed as under:

150̏ A classic example of forum shopping is when a litigant approaches one Court for relief but does not get the desired relief and then approaches another Court for the same relief. This occurred in Rajiv Bhatia v. Govt. of NCT of Delhi and others [MANU/SC/0552/1999 : (1999) 8 SCC 525]. The Respondent-mother of a young child had filed a petition for a writ of habeas corpus in the Rajasthan High Court and apparently did not get the required relief from that Court. She then filed a petition in the Delhi High Court also for a writ of habeas corpus and obtained the necessary relief. Notwithstanding this, this Court did not interfere with the order passed by the Delhi High Court for the reason that this Court ascertained the views of the child and found that she did not want to even talk to her adoptive parents and therefore the custody of the child granted by the Delhi High Court to the Respondent-mother was not interfered with. The decision of this Court is on its own facts, even though it is a classic case of forum shopping.”

88. The Learned Counsel for the Appellant refers to the decision of the Hon’ble Supreme Court in Commissioner of Sales Tax, Uttar Pradesh V R.P. Dixit Saghidar, (2001) 9 SCC Page 324, Spl. pg: 325, wherein at paragraph 5, it is observed as under:

5.̏ We are unable to subscribe to the view of the High Court. The aforementioned passage quoted from the Tribunal’s order shows that the Tribunal was of the view that once the order is quashed by the Assistant Commissioner, he could not in law remand the case for a decision afresh. As has been noted, before the Assistant Commissioner the counsel for the respondent had contended that the ex parte order should have been set aside because no notice had been received. When principles of natural justice are stated to have been violated it is open to the appellate authority, in appropriate cases, to set aside the order and require the Assessing Officer to decide the cases de novo. This is precisely what was directed by the Assistant Commissioner and the Tribunal, in our opinion, was clearly in error in taking a contrary view.”

89. The Learned Counsel for the `Appellant’ refers to the decision of the Hon’ble Supreme Court in P. Malaichami V Andi Ambalam and Others, reported in (1972) 2 SCC, page 170 at Spl. pg: 188, wherein at paragraph 31, it is observed as under:

31.̏ Finally, we must deal with the appeal made to us that the justice should be done irrespective of the technicalities. Justice has got to be done according to law. A Tribunal with limited jurisdiction cannot go beyond the procedure laid down by the statute for its functioning. If it does so it would be acting without jurisdiction.”

90. The Learned Counsel for the `Appellant’ cites a decision of the Hon’ble Supreme Court in Pancham Chand and Others V State of Himachal Pradesh (2008) 7 SCC, Page 117 at Spl. pg: 124, wherein at paragraph 19, it is observed as under:

19.̏ Apart from the fact that nothing has been placed on record to show that the Chief Minister in his capacity even as a member of the Cabinet was authorised to deal with the matter of transport in his official capacity, he had even otherwise absolutely no business to interfere with the functioning of the Regional Transport Authority. The Regional Transport Authority being a statutory body is bound to act strictly in terms of the provisions thereof. It cannot act in derogation of the powers conferred upon it. While acting as a statutory authority it must act having regard to the procedures laid down in the Act. It cannot bypass or ignore the same.”

91. The Learned Counsel for the `Appellant’ adverts to the decision of the Hon’ble Supreme Court in National Securities Depository Limited V Securities and Exchange Board of India, reported in (2017) 5 SCC at page 517, Spl. pgs: 523 and 528: wherein at paragraph 8, 9 and 21, it is observed as under:

8.̏  It is interesting to note that under Section 15-M, a person shall not be qualified for appointment as the Presiding Officer of the three member Appellate Tribunal unless he is a sitting or retired Judge of the Supreme Court, or a sitting or retired Chief Justice of a High Court, or is a sitting or retired Judge of a High Court who has completed not less than 7 years of service as a Judge in a High Court. This is one indicia of the fact that the Appellate Tribunal, being manned by a member of the higher judiciary, is intended to hear appeals only against quasi-judicial orders.

9. Also, appeals are to be filed by persons aggrieved not only by an order of the Board made under the SEBI Act, Rules or Regulations, but by orders made by an adjudicating officer under the Act. Under Section 15-I, the Board can appoint an officer not below the rank of a Division Chief to be an adjudicating officer to hold an inquiry, give a hearing to the person concerned and thereafter impose a penalty, all of which points to only quasi-judicial functions being exercised by such officers. Under sub­section (3) of Section 15-T, every appeal is to be filed within a period of 45 days from the date on which a copy of the order made by the Board or the adjudicating officer, as the case may be, is received by him. Generally administrative orders and legislative regulations made by the Board are never received personally by “the person aggrieved”. This is another pointer to the fact that the order spoken of in sub-section (1) of Section 15-T is only a quasi-judicial order. Also, it is important to note under sub-section (4) that the Appellate Tribunal may ultimately pass orders confirming, modifying or setting aside the order appealed against. In the Clariant judgment referred to hereinabove, paragraph 74 clearly states that: (SCC p. 550)

74.“The jurisdiction of the appellate authority under the Act is not in any way fettered by the statute and thus, it exercises all the jurisdiction as that of the Board”.

[emphasis supplied]

This being the case, it is clear that the appeal being a continuation of the proceeding before the Board, the proceeding can only be quasi-judicial in nature.”

21. A judgment of this Court dealing with the very Act we are dealing with is reported as Clariant International Ltd. v. SEBI – (2004) 8 SCC 524. In our view certain observations made in this judgment almost conclude the matters raised in this appeal. While discussing the effect of the Board being an expert body, this Court in paragraph 71 stated: (SCC p. 549)

“71.The Board is indisputably an expert body. But when it exercises its quasi-judicial functions, its decisions are subject to appeal. The Appellate Tribunal is also an expert Tribunal.”

(emphasis supplied)

In para 77 this Court further went on to state: (SCC p. 550)

“The Board exercises its legislative power by making regulations, executive power by administering the regulations framed by it and taking action against any entity violating these regulations and judicial power by adjudicating disputes in the implementation thereof. The only check upon exercise of such wide-ranging powers is that it must comply with the Constitution and the Act. In that view of the matter, where an expert Tribunal has been constituted, the scrutiny at its end must be held to be of wide import. The Tribunal, another expert body, must, thus, be allowed to exercise its own jurisdiction conferred on it by the statute without any limitation.”

92. The Learned Counsel for the `Appellant’ refers to the decision of the Hon’ble Supreme Court in Clariant International V Securities and Exchange Board of India, reported in (2004) 8 SCC at page 524, Spl. pg: 549, wherein at paragraph 71, it is observed as under:

71.” The Board is indisputably an expert body. But when it exercises its quasi-judicial functions; its decisions are subject to appeal. The Appellate Tribunal is also an expert Tribunal. Only such persons who have the requisite qualifications are to be appointed as members thereof as would appear from sub-section (2) of Section 15-M of the said Act which reads thus:-

“15-M Qualification for appointment as Presiding Officer or Member of the Securities Appellate Tribunal.__(1)

(2) A person shall not be qualified for appointment as Member of a Securities Appellate Tribunal unless he is a person of ability, integrity and standing who has shown capacity in dealing with problems relating to securities market and has qualification and experience of corporate law, securities laws, finance, economics or accountancy:

Provided that a member of the Board or any person holding a post at senior management level equivalent to Executive Director in the Board shall not be appointed as Presiding Officer or Member of a Securities Appellate Tribunal during his service or tenure as such with the Board or within two years from the date on which he ceases to hold office as such in the Board.”

Appellant’s Citations (under `The Competition Act, 2002’) : 93. The Learned Counsel for the Appellant cites a decision of Hon’ble Supreme Court in SCM Solifert Ltd. and Anr. V Competition Commission of India, (2018) 6 SCC, at Spl. page 637, wherein at paragraph 20, it is observed as under:

20.̏ When the transaction has been completed and acquisition has been made and the latter transaction has exceeded holding more than 25% by the second purchase, obviously prior permission was required, as discussed hereinabove, as its total shareholding increased to 25.3%. Thus, we have no hesitation to hold that the notification under Section 6 (2) of the Act has to be ex ante.”

94. The Learned Counsel for the Appellant points out the order dated 24.06.2021 passed by the `1st Respondent/CCI’ under Section 31 (1) of the Competition Act, 2002 (vide Combination, Registration No. C­2020/06/747), in the matter of Jaadhu Holdings LLC (Acquirer) / Jio Platforms Limited (Target), wherein at paragraphs, 4, 5 and 9, it is observed as under:

4.̏ Jaadhu was incorporated in March 2020 under the laws of the State of Delaware, USA, and is currently stated to be not engaged in any business in India. As stated earlier, it is an wholly owned subsidiary of Facebook, which is a publicly traded company listed on NASDAQ, with its headquarters in California, USA. The Facebook group offers various products and services in the market for social networking and advertisement. Globally, Facebook’s main products / services include Facebook, Messenger, Instagram, WhatsApp, Oculus, Workplace and Portal. Facebook generates virtually all its revenue from selling advertising placements to marketers on its products/ services.

5. Jio Platforms is a company incorporated in India and a subsidiary of RIL. Jio Platforms owns and operates digital applications and holds controlling investments in certain technology related entities. Jio Platforms also holds 100% of the issued and outstanding share capital of Reliance Jio Infocomm Limited (RJIO), a public limited company incorporated in India. RJIO is a licensed telecommunication operator, providing mobile telephony services to users across India.

9. Based on the submissions of Jaadhu, the Commission observes that the activities of the Facebook group and Jio Platforms are similar in consumer communication applications and advertisement services. Further, the social interaction applications of Facebook group, particularly WhatsApp chat/ instant messaging application, and the telecommunication services offered by RJIO, a wholly owned subsidiary of Jio Platforms, are complementary to each other.”

and submits that the `1st Respondent/CCI’ necessarily had considered the `Business’ of the group `Entities’ in the `Competitive Assessment’. 95. The Learned Counsel for the Appellant cites the `Order’ dated 02.09.2014, passed by the `1st Respondent/CCI’ (u/n Section 31 (1) of the Competition Act, 2002) vide Combination Registration No. C-2014/06/184 in Dunearn Investments (Mauritius) Pte. (̏Dunearn” or “Acquirer”) / Intas Pharmaceuticals Limited (Target), wherein at paragraphs 2, 4 and 8, it is observed as under:

2.” The proposed combination relates to acquisition of 10.16 percent of the issued, subscribed and paid-up share capital of Intas Pharmaceuticals Limited. (“Intas”) by Dunearn from Mozart Limited (“Mozart”), a wholly owned subsidiary of ChrysCapital III LLC. (hereinafter “Dunearn”, “Mozart” and “Intas” are together referred to as “parties”)

4. Dunearn, incorporated in Mauritius is an investment holding company. It is an indirect subsidiary of Temasek Holding (Private) Limited (“Temasek”). Temasek is an investment company owned by the Government of Singapore. As stated in the notice as of date, Dunearn does not own any interests in the Indian pharmaceutical sector.

8. As stated earlier, the Acquirer is an investment holding company and an indirect subsidiary of Temasek. As per the information provided in the notice, there are no horizontal overlaps between the products and services of Intas and the rest of the Temasek group. As stated in the notice, Temasek has some minority investment in the companies engaged in the pharmaceutical and health sector in India including Medreich Limited, a pharmaceutical company in India. However, Temasek has entered into an agreement of divestment of its shareholding in Medreich Ltd. Moreover, as per the available records and information given by the Acquirer, even in respect of the overlapping products of Intas and Medreich Ltd., the combined market share is of minimal nature. Further, as stated in the notice neither Temasek nor any of its subsidiaries, associates or joint ventures has any significant vertical linkage with any of the business activities of Intas or its subsidiaries in India.”

96. The Learned Counsel for the `Appellant’ adverts to the order dated 22.02.2021, passed by the `1st Respondent / CCI’ (u/n Section 31 (1) of the Competition Act, 2002) vide (Combination Registration No.C-2021/01/805) in CDPQ Private Equity Asia Pte. Ltd. (Acquirer) / API Holdings Pte. Ltd. (Target), wherein at paragraphs 2, 4, 5, 7 and 8, it is observed as under:

2. “The Proposed Combination envisages an increase of shareholding of the Acquirer by approximately 2% in the Target by way of both a secondary acquisition of shares and a Combination Registration No. C-2021/01/805 Page 2 of 4 primary issuance of shares and compulsorily convertible preference shares by the Target. The increase of shareholding is accompanied by acquisition of certain additional rights as well. [Hereinafter, CDPQ Asia and API Holdings are collectively referred to as ‘Parties’.]

4. CDPQ Asia is a wholly-owned subsidiary of Caisse de Depot et Placement du Quebec (‘CDPQ’) and is located in Singapore. CDPQ is a Canadian institutional fund, which manages and serves depositors which comprises public and private pension and insurance funds in Quebec. In India, the Acquirer is present through its subsidiaries, viz. CDPQ India Private Limited, Ivanhoe Cambridge Investment Advisory (India) Private Limited and SITQ India Private Limited.

5. CDPQ is also present in India through its investments in various portfolio companies including, inter alia, Piramal Enterprises Limited (which is present in the pharmaceutical segment) (‘PEL’) and TVS Supply Chain Solutions Limited (which is engaged in the business of providing logistics services) (‘TVS’).

7. Based on the submissions, the Commission noted that Target exhibits horizontal overlaps with CDPQ’s portfolio companies, namely PEL and TVS in the segment of manufacture of pharmaceuticals and provision of logistics services, respectively. The Commission decided to leave the delineation of the relevant markets open as it was observed that the Proposed Combination is not likely to cause an appreciable adverse effect on competition in any of the relevant markets. As per the information submitted, the presence of the Target is minimal in these segments.

8. Similarly, based on the submission of the Acquirer, the Commission noted that there are various vertical relationships, existing and potential, between the portfolio companies of CDPQ and the Target. However, the presence of the Target in these segments is minimal and accordingly, it appears that the Parties do not have any ability or incentive to foreclose competition.”

97. The Learned Counsel for the `Appellant’ adverts to the `Order’ dated 22.03.2019, passed by the `1st Respondent/CCI’ (u/n Section 31(1) of the Competition Act, 2002) in Deli CMF Pte. Limited (Acquirer) / Delhivery Private Limited (Target) (vide Combination Registration No.C-2019/02/640), wherein at paragraphs 4, 6, 7 and 9, it is observed as under:

4. ̏The proposed combination is notified in relation to subscription by the Acquirer of preference shares in the Target (Proposed Combination). The Acquirer is an existing shareholder of the Target and currently holds 4.76% of the share capital, on a fully diluted basis. Post the Proposed Combination, the shareholding of Acquirer in Target will be 4.51%, on fully diluted basis (Deli and Delhivery are collectively referred to as the Parties).

6. The Acquirer, incorporated in Singapore, is a wholly owned subsidiary of China Momentum Fund, L.P. [CMF]. Acquirer has been incorporated solely for the purpose of making investments in the Target. CMF, established in accordance with the laws of Cayman Islands, is a private equity fund. Fosun China Momentum Fund GP, Ltd. [General Partner/FCM], a wholly owned subsidiary of Fosun International Ltd. [Fosun International], is the general partner of CMF.

7. In the notice, it has been submitted that the Proposed Combination is not notifiable in terms of the Section 5 of the Act, as it does not meet the financial thresholds prescribed thereunder. It has been further submitted that the Acquirer is filing the notice by way of abundant caution only. However, as per the submissions of the Acquirer, the management, control and operation of CMF including the authority to determine its policy, investment and other activities, are vested exclusively with FCM, which is a subsidiary of Fosun International Ltd. (FIL). Thus, FCM has the ability to control the affairs of CMF. Accordingly, the assets and liabilities of FIL are also required to be considered for the purpose of financial thresholds prescribed under Section 5 of the Act. Taking into account said financials of FIL, the proposed acquisition by the Acquirer qualifies as a combination under Section 5 of the Act.

9. It has been submitted that the Parties to the Proposed Combination do not produce/provide similar or identical or substitutable products or services either directly or indirectly. It has been further submitted that the Parties to the Proposed Combination are not engaged in any activity relating to production, supply, distribution, storage, sale and service or trade in products or provision of services, which is at different stages or level of the production chain. However, one of the companies beneficially owned by FIL is seen to have investments in an entity that is engaged in leasing of trucks in Karnataka, Tamil Nadu and Mumbai. This is suggestive of a limited vertical overlap between the activities of the Parties and they are not engaged in similar line of business.”

98. The Learned Counsel for the `Appellant’ refers to the `Order’ dated 30.04.2020, passed by the `1st Respondent/CCI’ (u/n Section 31(1) of the Competition Act, 2002) in Canary Investments Limited and Link Investment Trust II (Acquirers) Intas Pharmaceuticals Limited (Target (vide Combination Registration No.C-2020/04/741), wherein at paragraphs 2, 3, 9, 10 and 13, it is observed as under:

2. “The Proposed Combination envisages acquisition of ~ 3% of the shareholding in Intas by the Acquirers, along with certain contractual rights under SHA.

3. Canary is an investment company registered in Mauritius. It is wholly owned by ChrysCapital VIII LLC, which in-turn has been set up by ChrysCapital. ChrysCapital is engaged in the business of making investments in different sectors including consumer goods and services, financial services, healthcare and pharmaceuticals.

9. In the instant matter, it is observed that the activities of Intas are similar to a few of the other pharmaceutical companies in which ChrysCapital has shareholding and contractual rights to participate in some of their strategic corporate actions. ChrysCapital currently holds less than or equal to 10 percent of the share capital in each of Mankind Pharma Limited (Mankind) and Eris Lifesciences Limited (Eris); and less than 20 percent of the share capital in each of GVK Biosciences Private Limited (GVK) and Curatio Healthcare Private Limited (Curatio).

10. The interest of ChrysCapital in Eris is limited to its shareholding. Therefore, Eris has not been considered for identification of overlaps between the portfolio of ChrysCapital and Intas. However, its interest in GVK, Curatio and Mankind include board representation, right to seek information as well as the right to veto certain corporate actions including the change in capital structure, mergers and acquisitions, commencing new line of business and amendment to charter documents (GVK, Curatio and Mankind shall be together referred to as Portfolio Entities). A holistic appreciation of these rights suggest that ChrysCapital enjoys the ability to influence the strategic focus and operations of GVK, Mankind and Curatio. By way of the Proposed Combination, the Acquirers now propose to acquire minority shareholding in Intas along with rights to participate in some of its strategic corporate actions.

99. The business of Intas and the Portfolio Entities are similar in respect of more than 150 pharmaceutical products. The combined market share of the parties is greater than 30% in more than 20 pharmaceutical products. These products are used to treat ailments falling under the categories of (a) alimentary tract and metabolism; (b) cardiovascular system; (c) dermatologicals; (d) genito-urinary system and sex hormones; (e) musculo-skeletal system; (f) nervous system; (g) respiratory system; and (h) various.” 99. The Learned Counsel for the `Appellant’ cites to the `Order’ dated 01.09.2017, passed by the `1st Respondent/CCI’ (u/n Section 31(1) of the Competition Act, 2002) in Copper Technology Pte. Ltd. (Acquirer) ANI Technologies Private Limited (Target) (vide Combination Registration No.C-2017/08/525), wherein at paragraphs 2, 4 and 6, it is observed as under:

2. ̏The proposed combination relates to subscription by CTPL of 9.57% fully diluted paidup share capital of ANI. In addition, CTPL is entitled to nominate a non- executive director on the board of ANI.

4. CTPL, a newly incorporated private company in Singapore, is an investment holding company. Currently, it does not carry out any business activities in India and is a wholly owned subsidiary of Aceville Pte. Ltd. (“Aceville”9, an entity incorporated in Singapore. Tencent Holdings Limited (“Tencent”9, a company incorporated in the Cayman Island, is the ultimate parent company of Aceville. Tencent is inter-alia, engaged in provision of value-added services and online advertising services to users in China.

6. The Commission observed that neither Tencent nor its subsidiaries are engaged in production, distribution or trading of similar or identical or substitutable products as of the main activities of ANI in India. However, Tencent group has investment in Flipkart through one of its portfolio company, which is inter-alia, engaged in the business of issuance of semi-closed prepaid instruments (i.e. Mobile Wallets) under the brand name of “PhonePe”. The Commission noted that PhonePe may be substitutable to Ola Money. In this regard, the Commission observed that these entities have insignificant presence in the activity of mobile wallet in India and accordingly there seems to be no competition concerns.”

100. The Learned Counsel for the `Appellant’ points out to the `Order’ dated 13.06.2016, passed by the `1st Respondent/CCI’ (u/n Section 31(1) of the Competition Act, 2002) in Marble II Pte. Limited (Acquirer) / Mphasis Limited (Target) (vide Combination Registration No.C-2016/04/391), wherein at paragraphs 2, 5, 9, 10 and 11, it is observed as under:

2. “The notice was given pursuant to execution of a Share Purchase Agreement (“SPA”) between EDS Asia Pacific Holdings (“EDS Asia”), EDS World Corporation (Far East) LLC (“EDS Far East”), EDS World Corporation (Netherlands) LLC (“EDS Netherlands”) and the Acquirer on 4th April 2016 for acquisition of up to 60.17% equity share capital of Mphasis. (Hereinafter, EDS Asia, EDS Far East and EDS Netherlands are collectively referred to as “Sellers”)

5. Marble II, a private limited company incorporated in Singapore, is a special purpose vehicle incorporated for the purpose of the Proposed Combination. It is a wholly owned subsidiary of Marble I Pte. Ltd. (“Marble I”) and an indirect subsidiary of Blackstone Capital Partners (Cayman II) VI L.P. (“BCP VI”), a private equity fund managed / advised by affiliates of The Blackstone Group L.P. (“Blackstone”). Blackstone listed on the New York Stock Exchange (“NYSE”) and headquartered in the United States, is a global alternative asset manager and provider of financial advisory services.

9. The Commission noted that at broader level, activities of the parties’ overlap in the business of IT and ITeS in India. While, the Acquirer, being a special purpose vehicle, is not engaged in any business activity, the portfolio companies of Blackstone and the Target are engaged in the overlapping activities i.e. IT and ITeS business in India. The Commission further noted that the provision of services relating to IT and ITeS can be sub-segmented into the provision of Consulting, Implementation Services and ITO services in India. However, in the instant case as the market shares of the parties are insignificant and there is presence of several other players, the market definition may be left open.

10. On the basis of the submissions of the Acquirer, the Commission noted that there is insignificant vertical relationship between the Target and portfolio companies of Blackstone in India.

11. It is observed that the competition assessment of the proposed combination for overlapping businesses of namely, (i) Mpahsis and the Acquirer, and (ii) Mpahsis and the relevant portfolio companies of Blackstone, would relate to the business of IT and ITeS in India. It is observed that the combined market share of the Target and portfolio companies of Blackstone, post-combination, are insignificant regardless of how the market is delineated. Further, other players, with a sizeable market share, are present in each of the sub-segment of the IT and ITeS business in India.”

101. The Learned Counsel for the `Appellant’ adverts to the `Order’ dated 21.05.2014 in Thomas Cook Vs Sterling Holiday Resorts India Limited (u/n Section 43A of the Competition Act, 2002) (vide Combination Registration No.C-2014/02/153), wherein at paragraphs 8 to 11, it is observed as under:

8. “The Parties have also contended that even assuming for the sake of argument that the concept of ‘composite combination’ is regulated and controlled under the Act, based on the previous decisions of the Commission, the Market Purchases do not meet the requirements of a composite combination. Citing reference to the earlier decisions of the Commission (Case bearing Reg. Nos. C­2012/03/45, C-2012/03/48 and C-2013/05/122), it has been argued that mutual interdependence is the relevant test to see whether two transactions are part of one composite combination. However, the Commission has never held that mutual interdependence is the only test to determine a composite combination. It is relevant to note sub-regulation (4) of Regulation 9 which states that a business transaction could be achieved by way of a series of steps or smaller individual transactions which are inter-connected or inter­dependent on each other. Even in the case bearing Reg. No. C-2013/05/122, the Commission regarded different steps/transactions as one combination as they were related to each other and there was no conclusion that mutual interdependence is the only test to determine a composite combination. It is observed that considering two different transactions as one combination depends on the facts and circumstances of each case with due regard to the subject matter of the transactions; the business and entities involved; simultaneity in negotiation, execution and consummation of the transactions; and also, whether it is practical and reasonable to isolate and view the transactions separately. In the instant case, though different, the Market Purchases are inherently related to the other transactions (Scheme and other acquisitions) and would not have been pursued in the absence of Parties envisaging the Scheme and other acquisitions.

9. In terms of sub-section (2) of Section 6 of the Act, any person or enterprise, who or which proposes to enter into a combination, shall give notice to the Commission disclosing the details of the proposed combination within the time prescribed therein. Whereas, at the time of giving notice to the Commission, TCISIL had already consummated the Market Purchases. Therefore, the Parties have failed to give notice under sub-section (2) of Section 6 of the Act.

10. In terms of Section 43A of the Act, if any person or enterprise fails to give notice under sub-section (2) of Section 6 of the Act, the Commission shall impose on such person or enterprise, a penalty which may extend to one percent of the total turnover or the assets, whichever is higher, of such a combination.

11. Though the penalty under section 43A of the Act may extent up to one percent of the total turnover or the assets of such a combination whichever is higher, the Commission has sufficient discretion to consider the conduct of the Parties and the circumstances of the case to arrive at an appropriate amount of penalty. In the instant case, the Parties consummated the Market Purchases between 10th and 12th February 2014 and same was disclosed in the notice filed on 14th February 2014. Though the parties have made full disclosure of all the transactions and there was no effort on their part to conceal information, the Commission discovered the violation of the provisions of the Act only from the notice given by the Parties. These facts go to suggest that the conduct of the Parties was not such that attracts severe penalty. Considering the facts and circumstances of the case, the Commission considers it appropriate to impose a relatively nominal penalty on the Parties. Therefore, in exercise of the powers under Section 43A of the Act, a penalty of INR 1,00,00,000 (Rupees one crore) is imposed on the Parties. The parties to the combination shall pay the penalty within 60 days from the date of receipt of this order.”

Appellant’s Decisions (on `Decisional Practice’ under Competition Act, 2002): 102. The Learned Counsel for the `Appellant’ refers to the `Order’ dated 24.06.2020, passed by the `1st Respondent/CCI’ (u/n Section 31(1) of the Competition Act, 2002) in Jaadhu Holdings LLC (Acquirer) / Jio Platforms Limited (Target) (vide Combination Registration No.C-2020/06/747), wherein at paragraphs 12, 13, 14, 16, 24, 25 and 28, it is observed as under:

12. “Jaadhu has submitted that there is no need to specifically define a relevant market in respect of consumer communication applications as the Proposed Combination is only a minority acquisition. The parties would continue to operate independently and therefore, the Proposed Combination would not alter the competitive landscape in any potential relevant market in any manner. Without prejudice to such submission, it has also submitted that Jaadhu firmly believes that it competes in the overall broader ‘market for user attention’. Facebook group (and Jio Platforms) compete broadly with all digital products and services that seek to capture user attention, which can be through a number of different services such as social networking, messaging, gaming, content viewing and sharing, music, amongst many others. Without prejudice to the above submissions, Jaadhu has further submitted that the Commission, in Vinod Gupta v. WhatsApp Inc. (Order dated 01.06.2016 in Case No. 99 of 2016) , had adopted a narrower market definition by covering consumer communication applications only. For such narrower market, Jaadhu has given submissions to suggest that the Proposed Combination is not likely to raise any competition concern. It has further submitted that it would be unrealistic to segregate consumer communication applications based on functionality or platform.

13. The Commission observes that JioChat, Messenger and WhatsApp are all consumer communication applications that primarily enable users to interact with each other. The purpose and features of these applications serve the particular purpose of interaction between individuals or groups and thus, it may not be appropriate to consider the relevant market as all user attention products/ services. Further, consumer communication applications can be segmented based on functionality – messaging, voice call and video call; platforms – applications meant for desktop, smartphones, tablets, mobile devices, etc.; and operating systems (OS) – proprietary applications and those that run over different mobile operating systems.

14. In Vinod Gupta case (supra), the Commission dealt with alleged abuse of dominant position by WhatsApp. While defining the relevant market, the Commission noted that “‘WhatsApp’, an instant communication app for smartphones using standard cellular mobile numbers, is a platform for communication through texting, group chats and voice and video calls. It is noted that instant communication apps cannot be compared with the traditional electronic communication services such as text messaging, voice calls etc. as provided by various telecommunication operators. It is so because unlike traditional modes of communication, instant messaging using communication apps are internet based and provide additional functionalities to the users. For example, users of communication apps can see when their contacts are online, when they are typing or when they last accessed the application. Further, instant communication apps can be used through smartphones only whereas traditional electronic communication services can be used through any mobile phone. There are also differences in the pricing conditions in both the abovesaid modes of communication. ‘WhatsApp’ is a free to download communication application which does not charge any fee from its users for providing the services and just uses internet connection on the device to send instant messages, connect voice calls etc. Further, text messaging through traditional modes can be done between people who do not use the mobile service of the same service provider, whereas instant messaging services typically require you and your contacts to be on the same communication application platform. Thus, the Commission is of the view that the relevant product market in this case may be considered as ‘the market for instant messaging services using consumer communication apps through smartphones’

(emphasis added)

16. The Commission observes that all the three consumer communication applications of the parties viz. WhatsApp, Messenger and Jio Chat offer similar functionalities and are available free of cost. It has been stated that applications like Duo and Hangout of Google, Snapchat, Wechat, imessage and FaceTime of Apple, Telegram and Viber also offer similar combination of functionalities and are available free of cost. These are seemingly the result of convergence in the consumer communication applications market. Thus, for the purpose of assessment of the Proposed Combination, it may not be relevant to further segment consumer communication applications based on functionalities.

24. Jaadhu has submitted that there is no need to specifically define a relevant market in respect of advertisement services as the Proposed Combination is only a minority acquisition. The parties would continue to operate independently and therefore, the Proposed Combination would not alter the competitive landscape in any potential relevant market in any manner. Without prejudice to such submission, Jaadhu has submitted that advertising is a large, diverse segment made up of many forms and mediums such as billboards, radio and television spots, print advertising, online advertising, etc. It has been further submitted that the purchasers of advertising services (i.e, advertisers) procure advertising space, often across mediums, to promote a product, service, or cause. It has been submitted that the mediums for conveying advertisements have expanded in the recent years and now include a wide range of platforms including print, television, radio, billboards, cinemas, etc. (commonly referred to as offline mediums of advertising) and also apps, websites, emails, etc. (commonly referred to as online mediums of advertising).

25. Jaadhu has however submitted that there is no need to segregate online and offline advertisements as the purpose and end-use of advertisements across all mediums is the same and these different segments are substitutable from both demand and supply side perspectives. Creating awareness of brands, products, services and ideas amongst customers / potential customers; persuading target customers to buy products or avail services and/or reinforcing/ maintaining the demand for products and services, all are indicated as intended uses of any advertisement. Further submissions have been made regarding fluidity between different mediums of advertising, including from a supply side perspective. Without prejudice to the above submissions on relevant market for advertising services, Jaadhu has also given submissions and details for a narrower market like online advertisement services and a further narrower market for online display advertisement services. The estimates given by Jaadhu for these three different alternative markets viz. advertisement services, online advertisement and online display advertisement are as under:

Table 1 Advertising Services in India for FY 2019

Name of Enterprise	Sales (INR Cr.)	Market Share(%)
Facebook	****	****
Jio	****	****
Star India	****	****
Google	****	****
Bennett Coleman	****	****
Zee Entertainment	****	****
Sony Pictures	****	****
Viacom 18	****	****
Others	****	****
Total	****	****

Table 2 Online Advertising in India for FY 2019

Enterprise	Sales (INR Cr.)	Market Share (%)
Facebook	****	****
Jio	****	****
Google	****	****
Hotstar	****	****
Amazon Ads	****	****
Flipkart	****	****
InMobi	****	****
Others	****	****
Total	****	****

Table 3 Online Display Advertising in India for FY 2019

Enterprise	Sales (INR Cr.)	Market Share (%)
Facebook	****	****
Jio	****	****
Google	****	****
Hotstar	****	****
Amazon Ads	****	****
Flipkart	****	****
InMobi	****	****
Others	****	****
Total	****	****

28. The Commission is of the view that the market definition for advertisement services may be left open as the Proposed Combination is not likely to increase concentration in any of the plausible relevant markets for advertisement services. The revenue of Jio Platforms from advertising services is only *** ** crore and *** ** crore in the preceding two financial years. Even in the narrowest possible market viz. market for online display advertisement services, the revenue of Jio Platforms for FY 2018­19 translates into only ***** of the total market. While earnings from advertisement is the main stream of revenue for Facebook, revenue of Jio Platforms from advertisement services is insignificant and constitutes less than 1% of its total revenue. The Commission also observes that online advertisement space features the presence of Google, which as per the data provided by Jaadhu, has a significant market position.”

103. The Learned Counsel for the Appellant points out the `Order’ dated 02.09.2014, passed by the `1st Respondent/CCI’ (u/n Section 31 (1) of the Competition Act, 2002) vide Combination Registration No. C 2014/06/184 in Dunearn Investments (Mauritius) Pte. (̏Dunearn” or “Acquirer”) / Intas Pharmaceuticals Limited (Target), wherein at paragraphs 3 and 7, it is observed as under:

3. “The notice was given pursuant to an application/communication dated 22nd May 2014, filed by Intas with the Foreign Investment Promotion Board (“FIPB”). As stated in the notice and other documents available on records, no definitive agreement for the proposed transaction had been executed by the parties till the date of application with the FIPB. In the notice, the Acquirer had stated that it might seek certain affirmative voting rights in its favour in the definitive agreements to be entered between the parties and accordingly, the notice was being given by them in abundant caution under subsection (2) of Section 6 of the Act, keeping in view the proviso to sub-regulation (8) of Regulations 5 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations (“Combination Regulations”).

7. The Acquirer has submitted, vide its reply dated 25th August, 2014 that the Share Purchase Agreement and the Shareholders’ Agreement in relation to the proposed combination have been executed between the parties on 22nd August 2014. It is observed that pursuant to the proposed combination, Dunearn would secure all the affirmative voting rights which were earlier available to Mozart. Further, as stated by the Acquirer, such rights are for the purpose of protecting the minority stake of the Acquirer in the target and would not be intended, nor likely, to result in operational control of Intas by the Acquirer, as promoters will continue to remain in its control and management.”

104. The Learned Counsel for the Appellant relies on the `Order’ dated 07.03.2018, passed by the `1st Respondent/CCI’ (u/n Section 31 (1) of the Competition Act, 2002) vide Combination Registration No. C 2018/01/550-553 in Reliance Jio Infcomm Limited (Acquirer) / Reliance Communications Limited, Reliance Telecom Limited and Reliance Infratel Limited (Targets) wherein at paragraphs 24 and 26, it is observed as under:

24. “With regards to the proposed combination relating to acquisition of the MCN assets from RCOM Entities by RJIO, it has been stated that the notice has been given by Acquirer in abundant caution as the turnover attributable to the MCN Assets is below INR 1000 Crore and as such transaction qualifies for de minimis exemption, in terms of Ministry of Corporate Affairs notification dated 27th March, 2017.

26. MCN assets are required by the telecom operators for provision of telephony services but no specific turnover can be assigned to it. The MCN Assets on a standalone basis do not perform any revenue generation activities and are merely used to support the provision of telecom business. In light of the above, the Commission is of the view that entire turnover of the mobile telephony business ought to be attributed to these assets.”

105. The Learned Counsel for the Appellant cites the `Order’ dated 25.06.2015, passed by the `1st Respondent/CCI’ (u/n Section 31 (1) of the Competition Act, 2002) vide Combination Registration No. C 2015/05/276 in Cairnhill CIPEF Limited (CCL) and Cairnhill CGPE Limited (CGL) (Acquirers / Mankind Pharma Limited (Target), wherein at paragraphs 5 and 6, it is observed as under:

5. “In relation to applicability of Item 1 to the proposed combination, it is noted that the SHA entitles the Investors to appoint 1 (one) director on the board of directors of Mankind. Further, the SHA confers certain affirmative rights to the Investors inter alia including commencement of a new business. Moreover, an acquisition could be considered to be made solely as an investment if the acquirer has no intention to directly or indirectly participate in the formulation and determination of the business decisions of the target. In view of the above, the acquisition of 11 per cent of equity share capital of Mankind would not be treated as solely as an investment and thus, the Commission is of the view that the proposed combination is not covered under Item 1 of Schedule 1 of the Combination Regulations and is notifiable under sub-section (2) of Section 6 of the Act.

9. It is also observed that the trigger for notification under sub­section (2) of Section 6 of the Act, in respect of the proposed combination, arose from the acquisition of shares in terms of the provisions of the SPAs. Further, as per the SPAs, the execution of SHA was a condition precedent for the closing of the proposed combination. Therefore, in terms of regulation 9(4) of Combination Regulations, the execution of SPAs and SHA are interconnected and interdependent on each other. Accordingly, it appears that the notice in the instant case ought to have been filed within 30 days of the execution of the SPA 1.”

Appellant’s Case Laws: 106. The Learned Counsel for the `Appellant’ refers to the decision in Amazon Seller Services Private Limited V Amway India Enterprises Pvt. Ltd. and Ors., reported in 2020 SCC Online Delhi 454, wherein at paragraphs 150 to 152, it is observed as under:

“The tort of inducement to breach of contract necessitates that there should be a contract in the first place between the online platforms and the Direct Selling Entities (DSEs. The mere fact that the online platforms may know the Code of Ethics of the DSEs, and the contractual stipulation imposed by such DSEs on their distributors, is insufficient to lay a claim of tortious interference. It was incumbent on plaintiffs to demonstrate active efforts on the part of or contracts entered into by the appellants/defendants to make a viable case for the tort of inducement to breach of contract. In this case, contentious issues have been raised which can be decided through trial. The single Judge could not, at the interlocutory stage, have ignored the rival contentions. Whether the online platforms induced a breach of contract between the DSEs and its ABOs/sellers is at best a matter of evidence, and not of inference.”

107. The Learned Counsel for the `Appellant’ relies on the decision of the Hon’ble Supreme Court in Ram Parshotam Mittal and Ors. V Hotel Queen Road Private Limited and Ors reported in 2019, 20 SCC 326 at Spl. pg: 351, wherein at paragraph 63, it is observed as under:

63. “In view of the observations made by this Court, the order in Ram Purshottam Mittal V Hillcrest Realty Sdn. Bhd. (2009) 8 SCC

79, is not final and is only a prima facie view in the matter of injunction. We find force in the submission of learned counsel appearing for the appellants that the observations in interim order cannot be taken as binding even for the purpose of deciding this matter as held in the State of Assam v. Barak Upatyaka D.U. Karamchari Sanstha (2009) 5 SCC 694, SCC 702 Para 21)

“21. A precedent is a judicial decision containing a principle, which forms an authoritative element termed as ratio decidendi. An interim order which does not finally and conclusively decide an issue cannot be a precedent. Any reasons assigned in support of such nonfinal interim order containing prima facie findings, are only tentative. Any interim directions issued on the basis of such prima facie findings are temporary arrangements to preserve the status quo till the matter is finally decided, to ensure that the matter does not become either infructuous or a fait accompli, before the final hearing.”

108. The Learned Counsel for the `Appellant’ falls back upon the decision of the Hon’ble High Court of Delhi in Spread Info Tech Consultants Private Limited V ZTE Kangxun Telecom Co. India Private Limited and another, reported in (2014) SCC Online Del 4137, wherein at paragraph 14, it is observed as under:

14.̏ It is settled law that observations made at interim stage are not binding. The defendants are seeking to rely on the observations on merit made by this Court in order dated 29th September, 2011 while dismissing its application under Order VII Rule 11 CPC. It is settled by the Supreme Court in a catena of judgments wherein it has been held that the observations made at interim stage are not binding at subsequent stages of the same proceeding either before the learned Single Judge or W.S.G. Cricket PTE. Ltd., AIR 2003 SC 1177, has held as under:

31. In the instant case, though the learned single judge proceeded on the prima facie finding that the proceedings in the English Courts would be oppressive and vexatious, in our view, those finding, recorded at the stage of passing an ad-interim order, would not bind the same learned judge much less they would bind the appellate court or the parties thereto at subsequent stage of the same proceeding because it cannot operate as issue estoppel… ”

109. The Learned Counsel for the `Appellant’ refers to the judgment of the Hon’ble Supreme Court Premlata @ Sunita V Naseeb Bee Ors., dated 23.03.2022 vide Civil Appeal Nos. 2055 – 2056 of 2022, wherein at paragraph 4, it is observed as under:

4.̏ At the outset, it is required to be noted and it is not in dispute that the plaintiff instituted the proceedings before the Revenue Authority under Section 250 of the MPLRC. These very defendants raised an objection before the Revenue Authority that the Revenue Authority has no jurisdiction to deal with the matter. The Tehsildar accepted the said objection and dismissed the application under Section 250 of the MPLRC by holding that as the dispute is with respect to title the Revenue Authority would not have any jurisdiction under MPLRC. The said order passed by the Tehsildar has been affirmed by the Appellate Authority (of course during the pendency of the revision application before the High Court). That after the Tehsildar passed an order rejecting the application under Section 250 MPLRC on the ground that the Revenue Authority would have no jurisdiction, which was on the objection raised by the respondents herein – original defendants, the plaintiff instituted a suit before the Civil Court. Before the Civil Court the respondents – original defendants just took a contrary stand than which was taken by them before the Revenue Authority and before the Civil Court the 5 respondents took the objection that the Civil Court would have no jurisdiction to entertain the suit. The respondents – original defendants cannot be permitted to take two contradictory stands before two different authorities/courts. They cannot not be permitted to approbate and reprobate once the objection raised on behalf of the original defendants that the Revenue Authority would have no jurisdiction came to be accepted by the Revenue Authority / Tehsildar and the proceedings under Section 250 of the MPLRC came to be dismissed and thereafter when the plaintiff instituted a suit before the Civil Court it was not open for the respondents – original defendants thereafter to take an objection that the suit before the Civil Court would also be barred in view of the Section 257 of the MPLRC. If the submission on behalf of the respondents – defendants is accepted in that case the original plaintiff would be remediless. The High Court has not at all appreciated the fact that when the appellant – original plaintiff approached the Revenue Authority / Tehsildar he was nonsuited on the ground that Revenue Authority / Tehsildar had no jurisdiction to decide the dispute with respect to title to the suit property. Thereafter when the suit was filed and the respondents – defendants took a contrary stand that even the civil suit would be barred. In that case the original plaintiff would be remediless. In any case the respondents – original defendants cannot be permitted to approbate and reprobate and to take just a contrary stand than taken before the Revenue Authority.”

110. The Learned Counsel for the `Appellant’ cites the decision in Antaios Compania S.A. v Salen Rederierna A.B. (1985) AC 191, 192 (H.L. (E.), wherein it is observed that if conclusions of words in a `Commercial Contract’ flout business sense, it must be made to yield business common sense. 111. The Learned Counsel for the Appellant cites the decision of Hon’ble Supreme Court in Md. Serajuddin and Ors. V The State of Orissa, reported in (1975) 2 SCC, page 47 at Spl. pg: 73 and 74, wherein at paragraphs at 61, 62 and 63, it is observed as under:

61.̏One important criterion in order to determine as to whether the contract of sale between the appellant and STC occasioned the export is to find whether STC could divert the goods supplied by the appellant for a purpose other than the export to the foreign buyer. If the answer be in the negative, it would necessarily follow that the contract between the appellant and STC resulted in the export of chrome concentrates. The above criterion was applied in a number of cases. In the case of Ben Gorm Nilgiri Plantations Co. (supra) Shah speaking for the majority observed :

There is no statutory obligation upon the purchaser to export the chests of tea purchased by him with the export rights. The export quota merely enables the purchaser to obtain export licence, which he may or may not obtain. There is nothing in law or in the contract between the parties, or even in the nature of the transaction which prohibits diversion of the goods for internal consumption.”

In the case of K. G. Khosla & Co. (supra) Sikri J. speaking. for this Court observed :

“Movement of goods from Belgium to India was in pursuance of the conditions of the contract between the assessee and the Director-General of Supplies. There was no possibility of these goods being diverted by the assessee for any other purpose. Consequently we hold that the sales took place in the course of import of goods within section 5 (2) of the Act, and are, therefore, exempt from taxation.

In the case of Coffee Board (supra) Hidayatullah CJ observed The compulsion to export here is of a different character. It only compels persons who buy on their own to export in their own turn by entering into another sale. It is a sale for export. Even with the compulsion the sale may not result for clauses 26, 30 and 31 visualize such happenings.”

62. Coming to the facts of the present case, I find that it was an f.o.b. sale and there was absolutely no chance of diversion of the goods by STC for a purpose other than the export to the foreign buyer.

63. It may also be mentioned that the position of STC under the contract between the appellant and STC was not of a purchaser in the ordinary sense of the term. Unlike such a purchaser, STC was not entitled to get profits and was not liable to bear losses resulting from fluctuations in the market rate of the goods specified in the contract. It was not open to STC to charge any price for the goods exported to the foreign buyer. The price to be charged from the foreign buyer was already fixed in the contract between the appellant and STC. An ordinary purchaser of goods is entitled to resell the goods or retain them with himself for any length of time. There is no obligation upon him to export the goods, much less to export them to a specified foreign buyer. As against that, in the present case is a result of the agreement between the appellant and STC, the latter was not entitled to retain the goods but was bound to export them immediately to the specified foreign buyer at a price which was already mentioned in the agreement between the appellant and STC. In fact, the arrangement for export of the goods was also made by the appellant because the contract of sale between the appellant and STC was f.o.b. contract. STC came into the picture as a statutory intermediary because of the legal requirements under the Exports Control Order. All that STC was entitled in the bargain was a commission of one ‘dollar per ton. Indeed, STC in one of its letters described its remuneration as commission. In the case of M/s Daruka & Co. V. The Union of India & Ors.(1) this Court observed in para 23 of the judgment that the Corporation like STC is in the nature of a commercial undertaking to which a licence has been granted for the export of certain commodities and the service charges are nothing but quid pro quo for the services rendered by the Corporation. The introduction of a statutory intermediary Eke STC with only entitlement of commission of one dollar per ton would not, in my opinion, affect the real nature of the transaction that it was the appellant who was to export the chrome concentrates to the foreign buyer.”

112. The Learned Counsel for the Appellant points out the decision of the Hon’ble Supreme Court in Shyam Telelink Limited V Union of India, reported in (2010) 10 SCC at page 165 at Spl. pg:174, wherein at paragraph 27, it is observed as under:

27. “In America Estoppel by acceptance of benefits is one of the recognized situations that would prevent a party from taking up inconsistent positions qua a contract or transaction under which it has benefited. American Jurisprudence, 2nd Edition, Volume 28, pages 677-680 discusses `Estoppel by acceptance of benefits’ in the following passage:

“Estoppel by the acceptance of benefits: Estoppel is frequently based upon the acceptance and retention, by one having knowledge or notice of the facts, of benefits from a transaction, contract, instrument, regulation which he might have rejected or contested. This doctrine is obviously a branch of the rule against assuming inconsistent positions.

As a general principle, one who knowingly accepts the benefits of a contract or conveyance is estopped to deny the validity or binding effect on him of such contract or conveyance.

This rule has to be applied to do equity and must not be applied in such a manner as to violate the principles of right and good conscience.”

113. The Learned Counsel for the Appellant adverts to the decision of the Hon’ble Supreme Court in Hari Shankar and Ors. V The Deputy Excise and Taxation Commissioner and Ors., reported in (1975) 1 SCC at page 737 at Spl. pgs: 745 and 746, wherein at paragraphs 16, it is among other things observed as under:

16.̏……… The bids given in the auctions were offers made by prospective vendors to the Government. The Government’s acceptance of those bids was the acceptance of willing offers made to it. On such acceptance, the contract between the bidders and the Government became concluded and a binding agreement came into existence between them. The successful bidders were then granted licences evidencing the terms of contract between them and the Government, under which they became entitled to, sell liquor. The licensees exploited the respective licences for a portion of the period of their currency, presumably in expectation of a profit. Commercial considerations may have revealed an error of judgment in the initial assessment of profitability of the adventure but that is a normal incident of the trading transactions. Those who contract with open eyes must accept the burdens of the contract along with its benefits. The powers of the Financial Commissioner to grant liquor licenses by auction and to collect licence fees through the medium of auctions cannot by writ petitions be, questioned by those who, had their venture succeeded, would have relied upon those very powers to found a legal claim. Reciprocal rights and obligations arising out of contract do not depend for their enforceability upon whether a contracting party finds it prudent to abide by the terms of the contract. By such a test no contract could ever have a binding force.”

114. The Learned Counsel for the `Appellant’ refers to the judgment of the Hon’ble Supreme Court in Vijay Karia and Ors. V Prysmian Cavi E Sistemi SRL and Ors. (2020) 11 SCC 1, at Spl. pg: 5, wherein it is observed and held as under:

“Enforcement of a foreign award may under Section 48 be refused only if the party resisting enforcement furnishes to the Court proof that any of the grounds stated in Section 48 has been made out to resist enforcement __ The said grounds are watertight, and no ground outside Section 48 can be looked at __ Given the “pro-enforcement bias” of the New York Convention, which has been adopted in Section 48, burden of proof on parties seeking enforcement has now been placed on parties objecting to enforcement and not the other way around ___ The challenge procedure in the primary jurisdiction gives more leeway to courts to interfere with a foreign award than the narrow restrictive grounds contained the New York Convention when a foreign award’s enforcement is resisted __ Further, the expression used in Section 48 is “may __ Thus, even if grounds for refusal of recognition and enforcement of an award are proved to exist, in one class of cases, the enforcing Court is not obliged to refuse enforcement.”

115. The Learned Counsel for the `Appellant’ refers to the judgment of the Hon’ble Supreme Court in Pradeep V Goa State Co-operative Bank, reported in (2017) (3) Maharashtra Law Journal, at page 274, Spl. pgs: 281 and 282, wherein at paragraphs 26 and 27, it is observed as under:

26.  ̏….mere allegation of fraud in the background, is of no assistance to disturb such transactions and / or proceedings which are initiated by the Financial Institution / Bank by following the due procedure of law’

27. ……the amount/payment deposited in the Court pursuant to the order passed by this Court, that itself, cannot be read and/or for the entire amount due to the respondent Bank has been duly paid. The respondent bank has taken action based upon the then existing facts of no payment on demand and the provision. Admittedly, there was no challenge raised or objection filed that itself concluded the situation. The actions so initiated by the bank in no way can be stated to be contrary to law. Therefore, SJS Business Enterprises (2004) 7 SCS 166 on fact itself distinct and distinguishable. Ludovico Sagrado Goveia (2017) (1) MH.L.J.(S.C. 608) is also of no assistance as petitioner in case in hand never raised appropriate application within time before conclusion of first sale. Therefore, there was no question of holding that sale in question was in violation of provisions of Rule 22 of the Rules as no case was made out by the petitioner to set aside even the second sale and consequent action arising out of the same.”

116. The Learned Counsel for the `Appellant’ relies on the decision of the Hon’ble Supreme Court in Electrosteel Castings Limited V U V Asset Reconstruction (2021) SCC Online SC 1132, at page 385, wherein at paragraph 29, it is observed as under:

29.“However it is required to be noted that except the words used `fraud’/`fraudulent’ there are no specific particulars pleaded with respect to the `fraud’. It appears that by a clever drafting and using the words `fraud’/`fraudulent’ without any specific particulars with respect to the `fraud’, the plaintiff-appellant herein intends to get out of the bar under Section 34 of the SARFAESI Act and wants the suit to be maintainable. As per the settled preposition of law mere mentioning and using the word `fraud’/`fraudulent’ is not sufficient to test of `fraud’. As per the settled preposition of law such a pleading/using the word `fraud’/`fradulent’ without any material particulars would not tantamount to pleading of `fraud’. In case of Bishundeo Narain and Anr. 1951 SCR 548) in para 28, it is observed and held as under:

“……… Now if there is one rule which is better established than any other, it is that in cases of fraud, undue influence and coercion, the parties pleading it must set forth full particulars and the case can only be decided on the particulars as laid. There can be no departure from them in evidence. General allegations are insufficient even to amount to an averment of fraud of which any court ought to take notice however strong the language in which they are couched may be, and the same applies to undue influence and coercion. See Order 6, Rule 4, Civil Procedure Code.”

117. The Learned Counsel for the `Appellant’ cites the Judgment of this Tribunal dated 08.09.2021 in Devas Multimedia Private Limited V Antrix Corporation Limited, reported in (2021) SCC Online NCLAT 448, wherein at paragraphs 192 to 208, it is observed as under:

192. “Fraud vitiates every solemn proceeding and no right can be claimed by a fraudster the ground of technicalities. On behalf of the appellants, reliance has been placed on the definition of “fraud” as defined in Black’s Law Dictionary, which is as under:

“Fraud: (1) A knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment. Fraud is usually a tort, but in some cases (esp. when the conduct is willful) it may be a crime.

… (2) A misrepresentation made recklessly without belief in its truth to induce another person to act. (3) A tort arising from a knowing misrepresentation, concealment of material fact, or reckless misrepresentation made to induce another to act to his or her detriment. (4) dealing; esp., in contract law, the unconscientious use of the power arising out of the parties’ relative positions and resulting in an unconscionable bargain.”

193.Halsbury’s Laws of England has defined “fraud” as follows: Whenever a person makes a false statement which he does not actually and honestly believe to be true, for purpose of civil liability, the statement is as fraudulent as if he had stated that which he did know to be true, or know or believed be false. Proof of absence of actual and honest belief is all that is necessary to satisfy the requirement of the law, whether the representation has been made recklessly or deliberately, indifference or recklessness on the part of the representor as to the truth or falsity of the representation affords merely an instance of absence of such a belief.

194. In Kerr on the Law of Fraud and Mistake, “fraud” has been defined thus:

“It is not easy to give a definition of what constitutes fraud in the extensive significance in which that term is understood by Civil Courts of Justice. The courts have always avoided hampering themselves by defining or laying down as a general proposition what shall be held to constitute fraud. Fraud is infinite in variety… Courts have always declined to define it, … reserving to themselves the liberty to deal with it under whatever form it may present itself. Fraud … may be said to include property properly) all acts, omissions, and concealments which involve a breach of legal or equitable duty, trust or confidence, justly reposed, and are injurious to another, or by which an undue or unconscientious advantage is taken of another. All surprise, trick, cunning, dissembling and other unfair way that is used to cheat anyone is considered as fraud. Fraud in all cases implies a wilful act on the part of anyone, whereby another is sought to be deprived, by legal or Inequitable means, of what he is entitled to.”

195. In Ram Chandra Singh v. Savitri Devi ((2007) 10 SCC 674 Sunil Pannalal Banthia v City & Industrial Development Corpn. Of Maharashtra Ltd.), it was observed that fraud vitiates every Solemn act. Fraud and justice never dwell together and it cannot be perpetuated or saved by the application of any equitable doctrine Including res judicata. This Court observed as under: (SCC pp. 327-29, paras 15-18, 23 & 25)

“15. Commission of fraud on court and suppression of material facts are the core issues involved in these matters. Fraud, as is well known, vitiates every solemn act. Fraud and justice never dwell together.

16. Fraud is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by word or letter.

17. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud.

18. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfuly or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad.

23. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of the others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous.

25. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata.

(emphasis supplied)

196. In Madhukar Sadbha Shivarkar v. State of Maharashtra ((2006) 13 SCC 382, Nagar Nigam v Alfaheem Meat Exports (P) Ltd.), this Court observed that fraud had been played by showing the records and the orders obtained unlawfully by the declarant, would be a nullity in the eye of the law though such orders have attained finality. Following observations were made: (SCC pp. 569-70, para 27)

27. The said order is passed by the State Government only to enquire into the landholding records with a view to find out as to whether original land revenue records have been destroyed and fabricated to substantiate their unjustifiable claim by playing fraud upon the Tahsildar and appellate authorities to obtain the orders unlawfully in their favour by showing that there is no surplus land with the Company and its shareholders as the valid sub-leases are made and they are accepted by them in the proceedings under Section 21 of the Act, on the basis of the alleged false declarations filed by the shareholders and sub-lessees under Section 6 of the Act. The plea urged on behalf of the State Government and the de facto complainant owners, at whose instance the orders are passed by the State Government on the alleged ground of fraud played by the declarants upon the Tahsildar and appellate authorities to get the illegal orders obtained by them to come out from the clutches of the land ceiling provisions of the Act by creating the revenue records, which is the fraudulent act on their part which unravels everything and therefore, the question of limitation under the provisions to exercise power by the state Government does not arise at all. For this purpose, the Deputy Commissioner of Pune Division was appointed as the enquiry officer to hold Such an enquiry to enquire into the matter and submit his report for consideration of the Government to take further action in the matter. The legal contentions urged by Mr. Naphade, in justification of the impugned judgment and order prima facie at this stage, we are satisfied that the allegation of fraud in relation to getting the landholdings of the Villages referred to supra by the declarants on the alleged ground of destroying original records and fabricating revenue records to show that there are 384 sub­leases of the land involved in the proceedings to retain the surplus land illegally as alleged, to the extent of more than 3000 acres of land and the orders are obtained unlawfully by the declarants in the land ceiling limits will be nullity in the eye of the law though such they are tainted with fraud, the same can be interfered with by the State Government and officers to pass appropriate orders. The landowners are also aggrieved parties to agitate their rights to get the orders which are obtained by the declarants as they are vitiated in on account of nullity is the tenable submission and the same is well founded and therefore, we accept the submission to justify the impugned judgment and order Babu Maruti Dukare v. State of Maharashtra ((2006) 3 SCC

549, Intellectuals Forum v State of A. P) of the Division Bench of the High Court.”

(emphasis supplied)

197. In Jai Narain Parasrampuria v. Pushpa Devi Saraf ((2006) 3 SCC 434 Bombay Dyeing & MFG. Co. Ltd., (3) v Bombay Environmental Action Group), this Court observed that fraud Vitiates every solemn act. Any order or decree obtained by practicing fraud is a nullity. his Court held as under:

“55. It is now well settled that fraud vitiates all solemn act. Any order or decree obtained by practising fraud is a nullity. [See (1) Ram Chandra Singh v. Savitri Devi ((2007) 10 SCC 674, Sunil Paannalal Banthia v City & Industrial Development Corpn. Of Maharashtra Ltd.,) followed in (2) Kendriya Vidyalaya Sangathan v. Girdharilal Yadav ((2005) 13 SCC 495: (2006) SCC (L & S) 1225, State of Orissa v Gopinath Dash; (3) State of A.P. v. T. Suryachandra Rao ((2004) 4 SCC 489, Special Response No. 1 of 2001, In Re. (4) Ishwar Dutt v. LAO ((2004) 3 SCC 214, Jamshed Hormusji wadia v Port of Mum bai (5) Lillykutty v. Scrutiny Committee, SC & ST; (6) Maharashtra SEB v. Suresh ((2002) 2 SCC 333, BALCO Employees’ Union v Union of India (6) Suresh Raghunath Bhokare ((2001) 3 SCC 635, Ugar Sugar Works Ltd. v Delhi Admn.; (7) Satya v. Teja Singh ((2000) 5 SCC 287, Monarch Infrastructure P. Ltd.,v Ulhasnagar Municipal Corpn.; (8) Mahboob Sahab v. Syed Ismai ((1997) 1 SCC 388, M. C. Mehta v Kamal Nath ; and (9) Asharfi Lal v. Koili ((1996) 6 SCC 558, Shivsagar Tiwari v Union Of India.]

(emphasis supplied)

198. In State of A.P. v. T. Suryachandra Rao ((2004) 4 SCC 489, Special Reference No. 1 of 2001, In Re, it was observed that where the land which was offered for surrender had already been acquired by the State and the same had vested in it. It was held that merely because an enquiry was made, the Tribunal was not divested of the power to correct the error when the respondent had clearly committed a fraud. Following observations were made: (SCC pp. 152-53 & 155, paras 7-10 & 13-16)

“7. The order of the High Court is clearly erroneous. There is no dispute that the land which was offered for surrender by the respondent had already been acquired by the State and the same had vested in it. This was clearly a case of fraud. Merely because an enquiry was made, the Tribunal was not divested of the power to correct the error when the respondent had clearly committed a fraud.

8. By “fraud” is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from ill-will towards the other is immaterial. The expression “fraud” involves two elements, deceit and injury to the person deceived. Injury is something other than economic loss, that is, deprivation of property, whether movable or immovable or of money and it will include any harm whatever caused to any person in body, mind, reputation or such others. In short, it is a non-economic or non-pecuniary loss. A benefit or advantage to the deceiver, will almost always cause loss or detriment to the deceived. Even in those rare cases where there is a benefit or advantage to the deceiver, but no corresponding loss to the deceived, the Second condition is satisfied. [See Vimla v. Delhi Admn. ((1996) 6 SCC 530, Common Cause v Union of India and Indian Bank v. Satyam Fibres (India) (P) Ltd.((1996) 5 SCC 510, New India Public School v HUDA]

9. A “fraud” is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another’s OSs. It is a cheating intended to get an advantage. (See S.P, Chengalvaraya Naldu V. Jagannath ((1996) 2 SCC 405 Delhi Science Forum v Union of India.)

10. “Fraud” as Is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letter or words, which includes or the other person authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. It is also well settled that misrepresentation amounts itself relief against to fraud. Indeed, Innocent misrepresentation may also give reason to claim fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. It is a fraud in taw if a party makes representations, which he knows to be false, and injury ensures therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of the others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although In a given case a deception may not amount to fraud, fraud is an anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. (See Ram Chandra Singh v. Savitri Devi ((2007) 10 SCC 674, Sunil Pannalal Banthia V City Industrial Development Corpn. Of Maharashtra Ltd..)

13. This aspect of the matter has been considered recently by this Court in Roshan Deen v. Preeti Lal ((1995) 5 SCC 482, LIC v Consumer Education & Research Centre, Ram Preeti Yadav v. U.P. Board of High School and Intermediate Education ((1995) 2 SCC 161, Ministry of Information & Broadcasting Govt. of India v Cricket Assn. of Bengal, Ram Chandra Singh v. Savitri Devi ((20007) 1o SCC 674 Sunil Pannalal Banthia V City Industrial Development Corpn. Of Maharashtra Ltd..) and Ashok Leyland Ltd. v. State of T.N ((1993) 52 DLT 168, Home communication Ltd. v Union of India)

14. Suppression of a material document would also amount to a fraud on the court. (See Gowrishankar v. Joshi Amba Shankar Family Trust((1991) 2 SCC 48, Premchand Somchand Shah v Union of India and S.P. Chengalvaraya Naidu v. Jagannath ((1996) 2 SCC 405 Delhi Science Forum v Union of India.)

15. “Fraud” is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. Although negligence is not fraud but it can be evidence of fraud; as observed in Ram Preeti Yadav ((1995) 2 SCC 161 Ministry of Information & Broadcasting, Govt. of India v Cricket Assn. of Bengal).

16. In Lazarus Estates Ltd. v. Beasley2, Lord Denning observed at QB pp. 712 and 713: (All ER p. 345 C)

‘No judgment of a court, no order of a minister can be allowed to stand if it has been obtained by fraud. Fraud unravels everything.’

In the same judgment, Lord Parker, L.J. observed that fraud ‘vitiates all transactions known to the law of however high a degree of solemnity’ (All ER p. 351 E-F).”

(emphasis supplied)

199. In A.V. Papayya Sastry v. State of A.P, ((1987) 2 SCC 295 Sachidanand Pandey v State of W.B.) , this Court as to the effect of fraud on the Judgment or order observed thus: (SCC pp. 231 & 236-37, paras 21-22 & 38-39)

“21. Now, it is well-settled principle of law that If any judgment or order is obtained by fraud, it cannot be said to be a judgment or order in law. Before three centuries, Chief Justice Edward Coke proclaimed:

‘Fraud avoids all judicial acts, ecclesiastical or temporal.”

22. It is thus settled proposition of law that a judgment, decree or order obtained Dy playing fraud on the court, tribunal or authority Is a nullity and non est in the eye of the law. Such a judgment, decree or order-by the first court or by the final court-has to Decree treated as nullity by every court, superior or Inferior. It can be challenged in any court, at any time, in appeal, revision, writ or even in collateral proceedings.

38. The matter can be looked at from a different angle as well. Suppose, a case is decided by a competent court of law after hearing the parties and an order is passed in favour of the plaintiff applicant which is upheld by all the courts including the final court. Let us also think of a case where this Court does not dismiss special eave petition but after granting leave decides the appeal finally by recording reasons. Such order can truly be said to be a judgment to which Article 141 of the Constitution applies. Likewise, the doctrine of merger also gets attracted. All orders passed by the courts/authorities below, therefore, merge in the judgment of this Court and after such judgment, it is not open to any party to the judgment to approach any court or authority to review, recall or reconsider the order.

39. The above principle, however, is subject to exception of fraud. Once it is established that the order was obtained by a successful party by practising or playing fraud, it is vitiated. Such order cannot be held legal, valid or in consonance with law. It is non-existent and non est and cannot be allowed to stand. This is the fundamental principle of law and needs no further elaboration. Therefore, it has been said that a judgment, decree or order obtained by fraud has to be treated as a nullity, whether by the court of first instance or by the final court. And it has to be treated as non est by every court, superior or inferior.”

Supervisory jurisdiction of the court can be exercised in case of error apparent on the face of the record, abuse of process and if the issue goes to the root of the matter.

200. In S.P. Chengalvaraya Naidu v. Jagannath ((1996) 2 SCC 405, Delhi Science Forum v Union of India), this Court noted that the issue of fraud goes to the root of the matter and it exercised powers under Article 136 to cure the defect. The Court observed: (SCC p. 5, paras 5-6)

“5. The High Court ((1986) 2 SCC 594 Chaitanya Kumar v State Bank of Karnataka), in our view, fell into patent error. The short question before the High Court was whether in the facts and circumstances of this case, Jagannath obtained the preliminary decree by playing fraud on the court. The High Court, however, went haywire and made observations which are wholly perverse. We do not agree with the High Court that ‘there is no legal duty cast upon the plaintiff to come to court with a true case and prove it by true evidence’. The principle of ‘finality of litigation’ cannot be pressed to the extent of such an absurdity that It becomes an engine of fraud in the hands of dishonest litigants. The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, the process of the court is being abused. Property-grabbers, tax evaders, bank loan-dodgers and other unscrupulous persons from all walks of life find the court-process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person, whose case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation.

6. The facts of the present case leave no manner of doubt that Jagannath obtained the preliminary decree by playing fraud on the court. A fraud Is an act of deliberate deception with the design of securing something by taking unfair advantage of another It is a deception in order to gain by another’s loss. It Is a cheating intended to get an advantage. Jagannath was working as a clerk with Chunilal Sowcar. He purchased the property in the court auction on behalf of Chunilal Sowcar. He had, on his own volition, executed the registered release deed (Ext. B-15) in favour of Chunilal Sowcar regarding the property in dispute. He knew that the appellants had paid the total decretal amount to his master Chunilal Sowcar. Without disclosing all these facts, he filed the suit for the partition of the property on the ground that he had purchased the property on his own behalf and not on behalf of Chunilal Sowcar. Non-production and even non mentioning of the release deed at the trial is tantamount to playing fraud on the court. We do not agree with the observations of the High Court that the appellant defendants could have easily produced the certified registered copy of Ext. B-15 and non-suited the plaintiff. A litigant, who approaches the court, is bound to produce all the documents executed by him which are relevant to the litigation. If the withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the opposite party.

In addition, the Learned Counsel for the 1st Respondent refers to the decision of Hon’ble Supreme Court in Bhaurao Dagdu Paralkar V State of Maharashtra and Ors reported

in (2005) 7 SCC 605 wherein at para 9-16 it is observed as under:

9. By “fraud” is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from ill will towards the other is immaterial. The expression “fraud” involves two elements, deceit and injury to the person deceived. injury is something other than economic loss, that is, deprivation of property, whether movable or immovable or of money and it will include any harm whatever caused to any person in body, mind, reputation or such others. In short, it is a non-economic or non-pecuniary loss. A benefit or advantage to the deceiver, will almost always cause loss or detriment to the deceived. Even in those rare cases where there is a benefit or advantage to the deceiver, but no corresponding loss to the deceived, the second condition is satisfied. [See Vimla (Dr.) v. Delhi Admn. ((2003) 8 SCC 319 Ram Chandra Singh V Savitri Devi) and Indian Bank v. Satyam Fibres (India) (P) Ltd. ((2003) 8 SCC 311 Ram Preeti Yadav V U.P Board of High School & Intermediate Education]

10 . A “fraud” is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another’s loss. It is a cheating intended to get an advantage. (See S.P. Chengalvaraya Naidu v. Jagannath ((2002) 1 SCC 100: (2002) SCC (L & S) (1997, Roshan Deen v Preeti Lal)

11. “Fraud” as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letters or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letters, It is a well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of others in relation to a property would Ender the transaction void ab initio. Fraud and deception are synonymous. Although a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. (See Ram Chandra Singh v. Savitri Devi ((2001) 8 SCC 8: (2001) AIR SCW 3843, Gurdial Singh v Union of India).

12. In Shrisht Dhawan v. Shaw Bros. ((1996) 5 SCC 550, Indian Bank v Sathyam Fibres (India) (P) Ltd.,), it was observed as follows: (SCC p. 553, para 20) “Fraud” and collusion vitiate even the most solemn proceedings in any civilized System of jurisprudence. It is a concept descriptive of human conduct. Michael Levi kens a fraudster to Milton’s sorcerer, Camus, who exulted in his ability to, “wing me into the easy-hearted man and trap him into snares”. It has been defined as an act or trickery or deceit. In Webster’s Third New International Dictionary “fraud” in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another. In Black’s Law Dictionary “fraud” is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or Surender a legal right a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and if intended to deceive another so that he shall act upon it to his legal injury. In Concise Oxford Dictionary, it has been defined as Criminal Deception, use of false representation to gain unjust advantage; dishonest artifice or trick.

Accordingly to Halsbury’s Law of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date false in substance and in fact. Section 17 of the Contract Act, 1872 defines “Fraud” as an act committed by a party to a contract with intend to deceive another. From the dictionary meaning or even otherwise fraud arises out of a deliberate active role of the representator about the fact, which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of fact with knowledge that it was false. In a leading English Case that is Derry v Peek ((1996) 3 SCC 310, Gowrisankar v Joshi Amba Sankar Family Trust what constitutes “Fraud” was described thus: (All ER P 22 B-C)

“Fraud’ is proved when it is shown that your false representation has been made (I) knowingly , or (II) without belief in its truth, or (III) recklessly, careless whether if be true or false.:

But “fraud” in public law is not the same as ‘fraud” in private law. Nor can the ingredients, which establishes “fraud” in commercial transactions, be of assistance in determining fraud in administrative law. It has been aptly observed by Lord Bridge in Khawaja V Secy. Of State for Home Dept.,((2004) 3 SCC 1 Ashok Leyland Ltd., v State of T. N) that it is dangerous to introduce maxims of common law as to the effect of fraud while determining the fraud in relation to statutory law. “Fraud” in relation to the statute must be a colorable transaction to evade the provisions of a statute.

“If statute has been passed for someone particular purpose, a court of law will not countenance any attempt which may be made to extend the operation of the act to something else which is quite foreign to its object and beyond its scope. Present day concept of fraud on statute has veered round abuse of power or malafide exercise of power. It may arise due to overstepping the limits of power or defeating the provisions of statute by adopting subterfuge or the power may be exercise for extraneous or irrelevant consideration. The colour of fraud in public law or administrative law, as it is developing, is assuming differentiates. It arises from a deception committed by disclosure of incorrect facts knowingly and deliberately to invoke exercise of power and procure an order from an authority or Tribunal. It must result in exercise of jurisdiction which otherwise would not have been exercised. That is misrepresentation must be in relation to the conditions provided in a section on existence or non existence of which power can be exercised. But non disclosure of a fact not required by a statute to be disclosed may not amount to fraud. Even in commercial transactions non disclosure of every fact does not vitiate the agreement. ‘ In a contract every person must look for himself and ensure he acquires the information necessary to avoid bad bargain’. In public law the duty is not to deceive.” (see Shrisht Dhawan v Shaw Bros) ((1996) 5 SCC 550, Indian Bank v Satyam Fibres (India) (P) Ltd., SCC P. 554, Para 20)

13. This aspect of the matter has been considered recently by this court in Roshan Deen V Preeti Lal ((1993) Supp (3) SCC 2 ; AIR 1993 SC 2127, Mukund Lal Bhandari v Union of India), Ram Preeti Yadav v U.P Board of High School and Intermediate Education0 ((1992) 1 SCC 534, Shrisht Dawan v Shaw Bros. ), Ram Chandra Singh ((2001) 8 SCC 8 ; (2001) AIR SCW 3843, Gurudial Singh V Union of India) and Ashok Leyland Ltd. v State of T.N ((1983) 1 All ER 765; 1984 AC 74; (1982) 1 WLR 948 (HL) Khawaja v Secy. Of State of Home Deptt. )

14. Suppression of a material document would also amount to a fraud on the court. See Gowrishankar v. Joshi Amba Shankar Family Trust ((1963) Supp (2) SCR 585; AIR 1963 SC 1572, Vimla (Dr) v Delhi Admn. and S.P. Chengalvaraya Naidu cases. ((2002) 1 SCC 100; (2022) SCC (L & S) 97, Roshan Deen v Preeti Lal)

15. “Fraud” is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. Although negligence is not fraud but it can be evidence on fraud; as observed in Ram Preeti Yadav case ((1992) 1 SCC 534, Shrisht Dawan v Shaw Bros).

16. In Lazarus Estates Ltd. V. Beasley ((1956) 1 QB 702; (1956) 1 All ER 341; (1956) 2 WLR 502 (CA), Lazarus Estates Ltd., v Beasley , Lord Denning observed at QB pp. 712 and713: (All ER p. 345 C)

“No judgment of a court, no order of a minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything.” Tn the same judgment Lord Parker, L.J. observed that fraud vitiates all transactions known to the law of however high a degree of solemnity. (pn722 These aspects were recently highlighted in State of A.P. v. T. Suryachandra Rao ((1886-90) All ER Rep 1 ; (1889) 14 AC 337; 61 LT 265 (HL) Derry V Peek.)

The Learned Counsel for the 1st Respondent seeks in aid of the Hon’ble Supreme Court in Shrisht Dhawan (SMT) V M/s. Shaw Brothers reported in (1992) 1 SCC 534 at para 534 wherein it is observed as under:

20. Fraud and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct. Michael Levi likens a fraudster to Milton’s sorcerer, Comus, who exulted in his ability to, ‘wing me into the easy-hearted man and trap him into snares’. It has been defined as an act of trickery or deceit. In Webster’s Third New International Dictionary fraud in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another. In Black’s Legal Dictionary, fraud is defined as an fraud is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right; a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In Concise Oxford Dictionary, it has been defined as criminal deception, use of false representation to gain unjust advantage; dishonest artifice or trick. According to Halsbury’s Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date false in substance and in fact. Section 17 of the Contract Act defines fraud as act committed by a party to a contract with intent to deceive another. From dictionary meaning or even otherwise fraud arises out of deliberate active role of representator about a fact which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of a fact with knowledge that it was false. In a leading English case (Derry V Peek (1886-90) All ER 1: 1889 14 SC 337: 5TLR 625) what constitutes fraud was described thus: (All ER p. 22 B-C)

“[F]raud is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false.”

But fraud in public law is not the same as fraud in private law. Nor can the ingredients which establish fraud in commercial transaction be of assistance in determining fraud in Administrative Law. It has been aptly observed by Lord Bridge in Khawaja (Khawaja v Secy of State for Home Deptt., (1983) 1 All ER 765) that it is dangerous to introduce maxims of common law as to effect of fraud fraud while determining fraud in relation to statutory law. In Pankaj Bhargav v Mohinder Nath, (1991) 1 SCC 556; AIR 1991 SC 1233) it was observed that fraud in relation to statute must be a colourable transaction to evade the provisions of a statute. A statute has been passed for some one particular purpose, a court of law will not countenance any attempt which may be made to extend the operation of the Act to something else which is quite foreign to its object and beyond its scope.” (Craies on Statue Law, 7th Edn., P.79). Present day concept of fraud on statute has veered round abuse of power or mala fide exercise of power. It may arise due to overstepping the limits of power or defeating the provision of statute by adopting subterfuge or the power may be exercised for extraneous or irrelevant considerations. The administrative law, as it is developing, is assuming different shades. It arises from a deception committed by disclosure of incorrect facts knowingly and deliberately to invoke exercise of power and procure an order from an authority or tribunal. It must result in exercise of jurisdiction which otherwise would not have been exercised. That is misrepresentation must be in relation to the conditions provided in a section on existence or non-existence of which power can be exercised. But fraud. Even in fact not required by a statute to be disclosed may not amount to fraud. Even in commercial transactions nondisclosure of every fact does not vitiate the agreement. In a contract every person must look for himself and ensures that he acquire deceive. Information necessary to avoid bad bargain.” (Anson’s Law of Contract) In public law the duty is not to deceive. For instance non­disclosure of any reason in the application under e remises Act about its need after expiry of period or failure to give reason that the premises shall be required by son, daughter or any other family member does not result in misrepresentation or fraud. It is not misrepresentation under section 21 to state that the premises shall be needed by the landlord after expiry of the lease even though the premises in occupation of the landlord on the date of application or, after expiry or period were or may be sufficient. a non-disclosure of fact which is not required by law to be disclosed does not amount to misrepresentation. section 21 does not place any positive or comprehensive duty on the landlord to disclose any fact except that he did not need the premises for the specified period. even the controller is not obliged with a pro-active duty to investigate. silence or non­disclosure of facts not required by law to be disclosed does not amount to misrepresentation. even in contracts it is excluded as is clear from explanation to section 17 unless it relates to fact which is likely to affect willingness of a person to enter into a contract. fraud or misrepresentation resulting in vitiation of permission in context of section 21 therefore could mean disclosure of false facts but for which the Controller would not have exercised jurisdiction. The Learned Counsel for the 1st Respondent adverts to the Judgment of the Hon’ble Supreme Court in Venture Global Engineering V Tech Mahindra Limited reported in (2018) 1 SCC 656 wherein at para 76-83 it is observed as under:

201. The expression “fraud”, what it means and once proved to have been committed by the party to the lis against his adversary then its effect on the judicial proceedings was succinctly explained by this Court in Ram Chandra Singh v. Savitri Devi ((2010) 8 SCC 660; (2010) 3 SCC (CIV) 523, Venture Global Engg. V Satyam computer Services Ltd.) in the following words: (SCC p. 322b-d)

“Fraud as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by word or letter. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent m is representation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema principles and any affair tainted with fraud cannot be judicata.” perpetuated or saved by the application of any equitable doctrine including res judicata.”

202. Similarly, how the leading authors have dealt with the expressions “fraud”, misrepresentation”, suppression of material facts” with reference to various English cases also need to be taken note of. This is what the learned author Kerr in his book Fraud and Mistake has said on these expressions.

203. While dealing with the question as to what constitutes fraud, the learned author said, “What amounts to fraud has been settled by the decision of House of Lords in Derry Peek ((2010) 7 SCC 1, Reliance Natural Resources Ltd., v Reliance Industries Ltd., where Lord Herschell said: (AC p. 374)

‘… fraud is proved when it is shown that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false.” (See Kerr on Fraud and Mistake, 7th Edn., pp. 10-11.)

204. The author has said that, Courts of Equity have from a very early period had jurisdiction to set aside awards on the ground of fraud, except where it is excluded by the statute. So also, if the award was obtained by fraud or concealment of material circumstances on the part of one of the parties so as to mislead the arbitrator or if either party be guilty of fraudulent concealment of matters which he ought to have declared, or if he wilfuly mislead or deceive the arbitrator, such award may be set aside. (See Kerr on Fraud and Mistake, 7th Edn., pp. 424-25.)

205. The author said that, if a man makes a representation in point of fact, whether by suppressing the truth or suggesting what is false, however innocent his motive may have been, he is equally responsible in a civil proceeding as if he had while committing these acts done so with a view to injure others or to benefit himself. It matters not that there was no intention to cheat or injure the person to whom the statement was made. (See Kerr on Fraud and Mistake, 7th Edn., p. 7.)

206.This rule of law is applicable not only between the two individuals entering into any contract but is also applicable between an individual and a company and also between the two companies. (See Kerr on Fraud and Mistake, 7th Edn., p. 99.)

207.The author said that this principle is also not limited to cases where an express and distinct representation by words has been made, but it applies equally to cases where a man by his silence causes another to believe in the existence of a certain state of things, or so conducts himself as to Induce a reasonable man to take the representation to be true, and to believe that it was meant that he should act upon it, and the other accordingly acts upon it and so alters his previous position. (See Kerr on Fraud and Mistake, 7th Edn., p. 110.)

208.The author said that where there is a duty or obligation to speak, and a man in reach of that duty or obligation holds his tongue and does not speak and does not say the thing which he was bound to say, if that be done with the intention of inducing the other party to act upon the belief that the reason why he did not speak was because he had nothing to say, there is a fraud. (See Kerr on Fraud and Mistake, 7th Edn., p. 110).

Para 7. The Learned counsel of the 1st Respondent cites two decision of Hon’ble Supreme Court in Panther Fincap and Management Services Ltd V Central Government through the Department of Company Affairs reported in (2005) SCC Online Bom 386 wherein at para 33 it is observed as under: 33. I have considered these rival submissions of the parties and I am of the opinion that the jurisdiction and the power of the various investigating authorities derived from the jurisdiction vested in them by the various legislations or statutes, the authority which is doing the inquiry and or conducting the investigation is required to carry out investigation keeping in mind the legal provisions and legal limitations which are stipulated under the respective statute. Undoubtedly it can be that there may be an overlapping investigation but in my opinion such an eventuality cannot prevent any investigating authority from carrying out investigation in respect of their jurisdiction conferred on them under the statute. I am also of the further opinion that the investigation in respect of the corporate fraud can be initiated and considered by the central government under section 237 (b)(i) of the companies Act. I have not been able to come across any provisions under the SEBI act in which any corporate fraud can be investigated by the SEBI. Undoubtedly it can be investigated under normal criminal law by the CBI. I am further of the opinion that merely because the material on the basis of which investigation is being undertaken is identical to the material which is subject matter of investigation by the other authority it cannot be stated that both the authorities cannot simultaneously investigate pursuant to power conferred on them under their respective statutes. I am of the opinion that every authority is entitled to investigate even may be in respect of the same material as well as from the angle and facet in which they have been asked to carry out investigation. It is possible that the SEBI may be investigating the same material on the ground of breach of the various provisions of the SEBI act and other security related legislations whereas the central government, department of company affairs can consider and/or investigate the fraud and/or breach of various provisions of law in the light and context of the provisions of the companies act may be in respect of the same material. However, I am of the opinion that the contentions advanced by the learned counsel for the appellant cannot be accepted particularly in view of the fact that every authority has been conferred various powers in their respective legislation. A similar issue aroused before the English Court under the identical provisions of investigation under the Companies Law and the Court of Appeal in the case of Re London United Investments plc reported in 1992 BCLC 285 equivalent to 1971 All England Law Reports page 849 it is held as under:

The power of the secretary of state to appoint inspectors to investigate the affairs of a company and to report is an important regulatory mechanism for ensuring probity in the management of companies’ affairs. That of course is in the public interest. Since the Secretary of State’s powers under s 432(2) are exercisable where there are circumstances suggesting fraud, it is likely that in many cases where inspectors are appointed an investigation by the police or the Serious Fraud Office could also be appropriate. But the code under the 1985 Act is a separate code even though it may overlap the field of criminal investigation.”

Para 8. The Learned Counsel for 1st Respondent points out the decision of Hon’ble Supreme Court in Dharampal Satyapal Ltd V Deputy Commissioner of Central Excise, Gauhati & Ors reported ion (2015) 8 SCC 519 where in para 39 & 40, it is observed as under:

39. We are not concerned with these aspects in the present case as the issue relates to giving of notice before taking action. While emphasising that the principles of natural justice cannot be applied in straitjacket formula, the aforesaid instances are given. We have highlighted the jurisprudential basis of adhering to the principles of natural justice which are grounded on the doctrine of procedural fairness, accuracy of outcome leading to general social goals, etc. Nevertheless, there may be situations wherein for some reason perhaps because the evidence against the individual is thought to be utterly compelling it is felt that a fair hearing “would make no difference”-meaning that a hearing would not change the ultimate conclusion reached by the decision-maker-then no legal duty to supply a hearing arises. Such an approach was endorsed by Lord Wilberforce in Malloch v. Aberdeen Corpn.((1971) 1 WLR 1578; (1971) 2 All ER 1278 (HL), who said that: (WLR p. 1595: All ER p. 1294)

“… A breach of procedure. cannot give [rise to] a remedy in the courts, unless behind it there is something of substance which has been lost by the failure. The court does not act in vain.”

Relying on these comments, Brandon L.3 opined in Cinnamond v. British Airports Authority ((1980) 1 WLR 582; (1980) 2 ALL ER 368 (CA) that: (WLR p. 593: All ER p. 377)

“ … no one can complain of not being given an opportunity to make representations if such an opportunity would have availed him nothing. “In such situations, fair procedures appear to serve no purpose since the “right” result can be secured without according such treatment to the individual.”

40. In this behalf, we need to notice one other exception which has been carved out to the aforesaid principle by the courts. Even if it is found by the court that there is a violation of principles of natural justice, the courts have held that it may not be necessary to strike down the action and refer the matter back to the authorities to take fresh decision after complying with the procedural requirement in those cases where non-grant of hearing has not caused any prejudice to the person against whom the action is taken. Therefore, every violation of a facet of natural justice may not lead to the conclusion that the order passed is always null and void. The validity of the order has to be decided on the touchstone of “prejudice”. The ultimate test is always the same viz. the test of prejudice or the test of fair hearing.”

118. In the decision of the Hon’ble Supreme Court in Vidya Drolia V Durga Trading Corporation, reported in (2021) 2 SCC at page 146, wherein at paragraph 146 to 153, it is observed and held as under:

146. ̏We now proceed to examine the question, whether the word ‘existence’ in Section 11 merely refers to contract formation (whether there is an arbitration agreement) and excludes the question of enforcement (validity) and therefore the latter falls outside the jurisdiction of the court at the referral stage. On jurisprudentially and textualism it is possible to differentiate between existence of an arbitration agreement and validity of an arbitration agreement. Such interpretation can draw support from the plain meaning of the word “existence’. However, it is equally possible, jurisprudentially and on contextualism, to hold that an agreement has no existence if it is not enforceable and not binding. Existence of an arbitration agreement presupposes a valid agreement which would be enforced by the court by relegating the parties to arbitration. Legalistic and plain meaning interpretation would be contrary to the contextual background including the definition clause and would result in unpalatable consequences. A reasonable and just interpretation of ‘existence’ requires understanding the context, the purpose and the relevant legal norms applicable for a binding and enforceable arbitration agreement. An agreement evidenced in writing has no meaning unless the parties can be compelled to adhere and abide by the terms. A party cannot sue and claim rights based on an unenforceable document. Thus, there are good reasons to hold that an arbitration agreement exists only when it is valid and legal. A void and unenforceable understanding is no agreement to do anything. Existence of an arbitration agreement means an arbitration agreement that meets and satisfies the statutory requirements of both the Arbitration Act and the Contract Act and when it is enforceable in law.

147. We would proceed to elaborate and give further reasons:

147.1. In Garware Wall Ropes Ltd., this Court had examined the question of stamp duty in an underlying contract with an arbitration clause and in the context had drawn a distinction between the first and second part of Section 7(2) of the Arbitration Act, albeit the observations made and quoted above with reference to ‘existence’ and ‘validity’ of the arbitration agreement being apposite and extremely important, we would repeat the same by reproducing paragraph 29 thereof: (SCC p. 238)

“29. This judgment in Hyundai Engg. case is important in that what was specifically under consideration was an arbitration clause which would get activated only if an insurer admits or accepts liability. Since on facts it was found that the insurer repudiated the claim, though an arbitration clause did “exist”, so to speak, in the policy, it would not exist in law, as was held in that judgment, when one important fact is introduced, namely, that the insurer has not admitted or accepted liability. Likewise, in the facts of the present case, it is clear that the arbitration clause that is contained in the sub- contract would not “exist” as a matter of law until the sub-contract is duly stamped, as has been held by us above. The argument that Section 11(6-A) deals with “existence”, as opposed to Section 8, Section 16 and Section 45, which deal with “validity” of an arbitration agreement is answered by this Court’s understanding of the expression “existence” in Hyundai Engg. case, as followed by us.”;

Existence and validity are intertwined, and arbitration agreement does not exist if it is illegal or does not satisfy mandatory legal requirements. Invalid agreement is no agreement.

147.2. The court at the reference stage exercises judicial powers. ‘Examination’, as an ordinary expression in common parlance, refers to an act of looking or considering something carefully in order to discover something (as per Cambridge Dictionary). It requires the person to inspect closely, to test the condition of, or to inquire into carefully (as per Merriam- Webster Dictionary). It would be rather odd for the court to hold and say that the arbitration agreement exists, though ex facie and manifestly the arbitration agreement is invalid in law and the dispute in question is non-arbitrable. The court is not powerless and would not act beyond jurisdiction, if it rejects an application for reference, when the arbitration clause is admittedly or without doubt is with a minor, lunatic or the only claim seeks a probate of a Will.

147.3. Most scholars and jurists accept and agree that the existence and validity of an arbitration agreement are the same. Even Starvos Brekoulakis accepts that validity, in terms of substantive and formal validity, are questions of contract and hence for the court to examine.

147.4. Most jurisdictions accept and require prima facie review by the court on non-arbitrability aspects at the referral stage.

147.5. Sections 8 and 11 of the Arbitration Act are complementary provisions as was held in Patel Engineering Ltd.. The object and purpose behind the two provisions is identical to compel and force parties to abide by their contractual understanding. This being so, the two provisions should be read as laying down similar standard and not as laying down different and separate parameters. Section 11 does not prescribe any standard of judicial review by the court for determining whether an arbitration agreement is in existence. Section 8 states that the judicial review at the stage of reference is prima facie and not final. Prima facie standard equally applies when the power of judicial review is exercised by the court under Section 11 of the Arbitration Act. Therefore, we can read the mandate of valid arbitration agreement in Section 8 into mandate of Section 11, that is, ‘existence of an arbitration agreement’.

147.6. Exercise of power of prima facie judicial review of existence as including validity is justified as a court is the first forum that examines and decides the request for the referral. Absolute “hands off” approach would be counterproductive and harm arbitration, as an alternative dispute resolution mechanism. Limited, yet effective intervention is acceptable as it does not obstruct but effectuates arbitration.

147.7. Exercise of the limited prima facie review does not in any way interfere with the principle of competence– competence and separation as to obstruct arbitration proceedings but ensures that vexatious and frivolous matters get over at the initial stage.

147.8. Exercise of prima facie power of judicial review as to the validity of the arbitration agreement would save costs and check harassment of objecting parties when there is clearly no justification and a good reason not to accept plea of non-arbitrability. In Subrata Roy Sahara v. Union of India,75 this Court has observed:

“191. The Indian judicial system is grossly afflicted with frivolous litigation. Ways and means need to be evolved to deter litigants from their compulsive obsession towards senseless and ill-considered claims. One needs to keep in mind that in the process of litigation, there is an innocent sufferer on the other side of every irresponsible and senseless claim. He suffers long-drawn anxious periods of nervousness and restlessness, whilst the litigation is pending 75 (2014) 8 SCC 470 without any fault on his part. He pays for the litigation from out of his savings (or out of his borrowings) worrying that the other side may trick him into defeat for no fault of his. He spends invaluable time briefing counsel and preparing them for his claim. Time which he should have spent at work, or with his family, is lost, for no fault of his. Should a litigant not be compensated for what he has lost for no fault? The suggestion to the legislature is that a litigant who has succeeded must be compensated by the one who has lost. The suggestion to the legislature is to formulate a mechanism that anyone who initiates and continues a litigation senselessly pays for the same. It is suggested that the legislature should consider the introduction of a “Code of Compulsory Costs”.

147.9. Even in Duro Felguera, Kurian Joseph, J., in paragraph 52, had referred to Section 7(5) and thereafter in paragraph 53 referred to a judgment of this Court in M.R. Engineers and Contractors Private Limited v. Som Datt Builders Limited to observe that the analysis in the said case supports the final conclusion that the Memorandum of Understanding in the said case did not incorporate an arbitration clause. Thereafter, reference was specifically made to Patel Engineering Ltd. and Boghara Polyfab Private Limited to observe that the legislative policy is essential to minimise court’s interference at the pre-arbitral stage and this was the intention of sub-section (6) to Section 11 of the Arbitration Act. Paragraph 48 in Duro Felguera 76 (2009) 7 SCC 696 specifically states that the resolution has to exist in the arbitration agreement, and it is for the court to see if the agreement contains a clause which provides for arbitration of disputes which have arisen between the parties. Paragraph 59 is more restrictive and requires the court to see whether an arbitration agreement exists – nothing more, nothing less. Read with the other findings, it would be appropriate to read the two paragraphs as laying down the legal ratio that the court is required to see if the underlying contract contains an arbitration clause for arbitration of the disputes which have arisen between the parties – nothing more, nothing less. Reference to decisions in Patel Engineering Ltd. and Boghara Polyfab Private Limited was to highlight that at the reference stage, post the amendments vide Act 3 of 2016, the court would not go into and finally decide different aspects that were highlighted in the two decisions.

147.10. In addition to Garware Wall Ropes Limited case, this Court in Narbheram Power and Steel Private Limited and Hyundai Engg. & Construction Co. Ltd., both decisions of three Judges, has rejected the application for reference in the insurance contracts holding that the claim was beyond and not covered by the arbitration agreement. The court felt that the legal position was beyond doubt as the scope of the arbitration clause was fully covered by the dictum in Vulcan Insurance Co. Ltd. Similarly, in M/s. PSA Mumbai Investments PTE. Limited, this Court at the referral stage came to the conclusion that the arbitration clause would not be applicable and govern the disputes. Accordingly, the reference to the arbitral tribunal was set aside leaving the respondent to pursue its claim before an appropriate forum.

147.11. The interpretation appropriately balances the allocation of the decision-making authority between the court at the referral stage and the arbitrators’ primary jurisdiction to decide disputes on merits. The court as the judicial forum of the first instance can exercise prima facie test jurisdiction to screen and knockdown ex facie meritless, frivolous and dishonest litigation. Limited jurisdiction of the courts ensures expeditious, alacritous and efficient disposal when required at the referral stage.

148. Section 43(1) of the Arbitration Act states that the Limitation Act, 1963 shall apply to arbitrations as it applies to court proceedings. Sub-section (2) states that for the purposes of the Arbitration Act and Limitation Act, arbitration shall be deemed to have commenced on the date referred to in Section. 21. Limitation law is procedural and normally disputes, being factual, would be for the arbitrator to decide guided by the facts found and the law applicable. The court at the referral stage can interfere only when it is manifest that the claims are ex facie time barred and dead, or there is no subsisting dispute. All other cases should be referred to the arbitral tribunal for decision on merits. Similar would be the position in case of disputed ‘no claim certificate’ or defence on the plea of novation and ‘accord and satisfaction’. As observed in Premium Nafta Products Ltd., it is not to be expected that commercial men while entering transactions inter se would knowingly create a system which would require that the court should first decide whether the contract should be rectified or avoided or rescinded, as the case may be, and then if the contract is held to be valid, it would require the arbitrator to resolve the issues that have arisen.

149. We would also resolve the question of principles applicable to interpretation of an arbitration clause. This is important and directly relates to scope of the arbitration agreement. In Premium Nafta Products Ltd., on the question of interpretation and construction of an arbitration clause, it is observed: (Bus LR p. 1723, para 6)

6 In approaching the question of construction, it is therefore necessary to inquire into the purpose of the arbitration clause. As to this, I think there can be no doubt. The parties have entered into a relationship, an agreement or what is alleged to be an agreement or what appears on its face to be an agreement, which may give rise to disputes. They want those disputes decided by a tribunal which they have chosen, commonly on the grounds of such matters as its neutrality, expertise and privacy, the availability of legal services at the seat of the arbitration and the unobtrusive efficiency of its supervisory law. Particularly in the case of international contracts, they want a quick and efficient adjudication and do not want to take the risks of delay and, in too many cases, partiality, in proceedings before a national jurisdiction.”

150. In Narbheram Power and Steel Private Ltd., this Court while dealing with the arbitration clause in the insurance agreement, has held that the arbitration clause should be strictly construed, relying on the principles of strict interpretation that apply to insurance contracts. These observations have been repeated in other cases.

151. What is true and applicable for men of commerce and business may not be equally true and apply in case of laymen and to those who are not fully aware of the effect of an arbitration clause or had little option but to sign on the standard form contract. Broad or narrow interpretations of an arbitration agreement can, to a great extent, effect coverage of a retroactive arbitration agreement. Pro-arbitration broad interpretation, normally applied to international instruments, and commercial transactions is based upon the approach that the arbitration clause should be considered as per the true contractual language and what it says, but in case of doubt as to whether related or close disputes in the course of parties’ business relationship is covered by the clause, the assumption is that such disputes are encompassed by the agreement. The restrictive interpretation approach on the other hand states that in case of doubt the disputes shall not be treated as covered by the clause. Narrow approach is based on the reason that the arbitration should be viewed as an exception to the court or judicial system. The third approach is to avoid either broad or restrictive interpretation and instead the intention of the parties as to scope of the clause is understood by considering the strict language and circumstance of the case in hand. Terms like ‘all’, ‘any’, ‘in respect of’, ‘arising out of’ etc. can expand the scope and ambit of the arbitration clause. Connected and incidental matters, unless the arbitration clause suggests to the contrary, would normally be covered.

152. Which approach as to interpretation of an arbitration agreement should be adopted in a particular case would depend upon various factors including the language, the parties, nature of relationship, the factual background in which the arbitration agreement was entered, etc. In case of pure commercial disputes, more appropriate principle of interpretation would be the one of liberal construction as there is a presumption in favour of one-stop adjudication.

153. Accordingly, we hold that the expression ‘existence of an arbitration agreement’ in Section 11 of the Arbitration Act, would include aspect of validity of an arbitration agreement, albeit the court at the referral stage would apply the prima facie test on the basis of principles set out in this judgment. In cases of debatable and disputable facts, and good reasonable arguable case, etc., the court would force the parties to abide by the arbitration agreement as the arbitral tribunal has primary jurisdiction and authority to decide the disputes including the question of jurisdiction and non-arbitrability.”

1st Respondent’s Contentions (Competition Commission of India) (In Competition Appeal (AT) Nos. 1, 2 and 3 of 2022): 119. The Learned Additional Solicitor General for the 1st Respondent/Competition Commission of India’ submits that the `Appellant’ (a direct Subsidiary of Amazon.com Inc (ACI), was issued with a `Show Cause Notice’ dated 04.06.2021, by the 1st Respondent/Commission and that the `impugned order dated 17.12.2021 was passed against the `Appellant’/`Amazon’ under Sections 43A, 44 and 45 of the Competition Act, 2002. 120. According to the 1st Respondent/CCI, the `Appellant’ wanted to notify a `Combination’ (Bearing Combination Registration No. C-2019/09/688 to it (1st Respondent/CCI), through `Notification’ dated 23.09.2019 (`Notice’) as per Section 6 (2) of the Competition Act, 2002, in Form I of Schedule II to the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations). 121. It is represented on behalf of the 1st Respondent/CCI that the `Proposed Combination’, as sought to be notified by the `Appellant’ to the `1st Respondent/CCI’ caused acquisition of 49% shares of the `FCL’ by the `Acquirer’ (Transaction III), constituent steps among other things concerning Intra-promoter group transactions between 1) `Future Coupons Private Limited’ 2) `Future Corporate Resources Private Limited’ (`FCRPL’) and 3) `Future Retail Limited’ (`FRL’). 122. It is the stand of the 1st Respondent/CCI that the `Appellant’ / `Amazon.com NV Investment Holdings LLC’, during the time of `notifying the Combination’, had stated that the intended ambit and purpose of the `Combination’ Viz., its investment in `FCPL’ (2nd Respondent) was in view of the `FCPL’s potential’ for `Long Term Value Creation’ and providing `Returns’ on its `Investment’; and also with a view to strengthen and augment the `Business of `FCPL’/2nd Respondent. 123. On behalf of the 1st Respondent/CCI, it is submitted that the `Appellant’ / `Amazon.com NV Investment Holdings LLC’, had mentioned that `it does not have any direct or indirect Shareholding’ in `FRL’ and further that it would not acquire directly any rights in `FRL’ and was only acquiring `Limited Investor Protection Rights’ via `FCPL’ (2nd Respondent) with a view to protect the value of its investment in `FCPL’. That apart, it was also mentioned that rights were derived from the rights granted to `FCPL’ (2nd Respondent) in terms of the `FRL SHA’, which was negotiated by the `Promoters’, `FRL’ and `FCPL’, independent of the investment by `Appellant’ in `FCPL’ (2nd Respondent) and with a view to unlock value for `FCPL’ (2nd Respondent). Therefore, a plea is taken on behalf of the `1st Respondent/CCI’ that the whole attention, as represented, during the time of notifying the `Combination’ was `FCPL’/`2nd Respondent’ and its `Business’ with `rights’ in `FRL’ being reflected as mere `Investor Protection Rights’. 124. The stand of the 1st Respondent/CCI is that as per terms of `Part V’, description of the `Combination’ of the abovementioned `Notice’, the `Combination’ notified by the `Appellant’ encompassed the undermentioned three transactions:

i) Transaction I: The issue of 9,183,754 Class A voting equity shares of Future Coupons Private Limited (FCPL) to Future Coupons Resources Private Limited (FCRPL). Prior to, and immediately post issuance of such equity shares, FCPL will be a wholly owned subsidiary of FCRPL (This was presented as being nothing but an internal re­organization within the Future Group); and

ii) Transaction II: Transfer of 13,666,287 shares of FRL held by FCRPL (representing Two decimal Five Two Percent (2.52%) of the issued, subscribed and paid-up equity share capital of Future Retail Limited (FRL), on a Fully Diluted Basis) to FCPL (This was also presented as being nothing but an internal re-organization within the Future Group); and

iii) Transaction III: The acquisition of the Subscription Shares representing Forty Nine percent (49%) of the total issued, subscribed and paid-up equity share capital of FCPL (on a Fully Diluted Basis) by the Appellant, by way of a preferential allotment and coupon business with a view to unlock value for FCPL as it showed potential for long terms value creation and return on investment).

125. On behalf of the 1st Respondent/CCI it is brought to the notice of this `Tribunal’ that the Appellant’s `Notice’ among other things had mentioned the following:

i) The Appellant and the relevant entities and persons, belonging to the Future Group had entered into: (a) a share subscription agreement dated 22.08.2019 (FCPL SSA); and (b) a shareholders agreement dated 22.08.2019 to determine respective rights and obligations as shareholders of FCPL (FCPL SHA).

ii) The parties had only executed FCPL SSA and FCPL SHA in relation to the Combination. (As aforementioned, it was represented that FCPL’s potential for long term value creation and providing returns on its investment, with a view to strengthen and augment the business of FCPL).

iii) The Appellant would acquire certain rights in terms of FCPL SHA to protect its investment in FCPL.

iv) Before the `Combination’, `FCPL’ had acquired equity warrants of `FRL’, Convertible into `Equity Shares’ representing 7.30% of the share capital of `FRL’, within 18 months of the date of allotment (Warrants Transaction). FCPL and FRL had entered into FRL SHA, which sets forth inter se mutual rights and obligations of the parties as shareholders.

v) The Appellant had submitted a presentation captioned `Taj Coupons – Business Plan for Five Years’ in response to Item 8.8 of Form I, which require the `notifying party’ to disclose documents, material (including reports, studies, plan, latest version of other documents, etc.) considered by and/or presented to the board of directors and/or key managerial person, in relation to the `proposed combination’.

vi) Existing and contemplated business arrangement/agreements between FRL and Amazon Seller Services Private Limited (ASSPL) (Business Solutions Agreement, Prime Now Program Terms, Prime Now FRL Amendment Agreement and Softlines FRL Agreement, referred to in paras 62 to 66, pages 46 to 48 of the Notice at pages 54 to 56, Convenience Compilation-II); agreement between Amazon Retail India Private Limited (ARIPL) and Future Consumer Limited (Future Consumer); Memorandum of Understanding among Amazon Pay (India) Private Limited (APIPL) and FRL; collectively referred to as Commercial Arrangements or Business Commercial Agreements.

But it was mentioned that all these `Business Commercial Agreements’ were neither inter connected with, nor part of the `Combination’; or not related to the `Combination’ whatsoever. 126. The categorical version of the `1st Respondent/CCI’ is that the `Retail Business’ of `FRL’ and the `Appellant’s interest in the same were not represented to the 1st Respondent/CCI as being the `focus’, `purpose’ and the `ambit’ of the `Combination’. In this connection, it is projected on the side of the 1st Respondent/CCI that pertaining to the rationale of the `Combination’, the `Appellant’ had stated that it believed that `FCPL’ held potential for `Long Term Value Creation’ and providing `Returns’ on its `Investment’. Moreover, it was mentioned that the `Appellant’ had determined to invest in `FCPL’ with a view to strengthen and augment the business of `FCPL’ (including the Marketing and Distribution of `Loyalty Cards’, `Corporate Gift Cards’ and `Reward Cards’ to Corporate Customers) and `unlock the value’ in the Company. 127. The Learned Additional Solicitor General, appearing for the 1st Respondent/CCI brings it to the notice of this `Tribunal’ that the 1st Respondent/CCI in regard to the considerations for the `Appellant’s Investment’ in `FCPL’, the nature and rationale of the rights, in respect of the `Appellant’ under `FRL SHA’, raised some queries and that the `Appellant’ through letter dated 15.11.2019, again emphasized `FCPL’ to be the `attention of the Combination’ and mentioned the following:

(i) The Appellant’s decision to invest in `FCPL’ is, among other things rested on the following considerations;

(a) the unique business model of FCPL addresses an existing gap in the payments landscape in India, thereby making it a strong and sound investment opportunity for Appellant (which holds similar existing investments in entities engaged in business activities within the payments market in India);

(b) while FCPL has a strong growth potential, in the short term, to add credibility to its financial position, it has invested in and proposes to invest in FRL, which is a publicly traded company with strong financials and futuristic outlook (vide Response to query No.2.5 of the letter dated 24th October, 2019 available at para 35 at page 35 of the submissions dated 15th November, 2019 of Appellant at page 104, Convenience Compilation-I) (Para 8.2 of the Impugned Order).

(ii) It does not have any direct or indirect shareholding in FRL. It would not acquire directly any rights in FRL. Appellant has only limited `Investor Protection Rights’ in FCPL with a view to protect the value of its investment in FCPL. These rights can be exercised only through FCPL and not directly by Appellant. The said rights have been derived from the rights granted to FCPL in terms of `FRL SHA’ which was negotiated by the Promoters, FRL and FCPL, independent of the investment by Appellant in FCPL and with a view to unlock value for FCPL. (vide Response to query No.2.5 of the letter dated 24th October, 2019 and Para 8.3 of the Impugned Order).

(iii) The Commercial Arrangements have not been entered into pursuant to the Combination and are not part of, or connected with, the Combination in any manner whatsoever. (Para 72 at page 45 of the submissions dated 15th November, 2019 of Appellant submitted in response to query 2.21 of the letter dated 9th October, 2019 at Page 100, Convenience Compilation-I. It was further asserted that though being executed contemporaneously with FCPL SHA and FCPL SSA, these are in no way connected with the Combination and each such commercial agreement has been negotiated between its respective parties, in isolation, and independent of the Combination. (vide para 45 at page 32 of the Appellant’s submission dated 15.11.2019 in response to query 2.12 of the Letter dated 9th October, 2019 at page 97 of Convenience Compilation-I). Furthermore, the Commercial Arrangements need not be examined under the framework for the regulation of combinations in terms of the Act and the Combination Regulations. (vide Para 4 of the Appellant’s submission dated 15.11.2019 furnished in response to query 2.5 of the Letter dated 24.10.2019 (Para 8.4 of the Impugned Order at page 8 of Convenience Compilation-I).

128. The crystalline stand of the 1st Respondent/CCI is that the `Combination Approval Process’ requires the `notifying person’ to submit the true, correct and complete information as regards the actual `Combination’ pursued by the `parties’ and to meet the requirements of the `Competition Act, 2002 and Regulations prescribed thereunder. Only then, the 1st Respondent/CCI will evaluate the effects of a `Combination’ in a proper perspective. 129. For the aforesaid reason, according to the 1st Respondent/CCI, it assessed the `Combination’ in the context of `Appellant’s Assertions’ in the `Notice’ and later representations where under the disclosures pertaining to the overlapping activities of Amazon’s group and `FRL’ were stated to be merely by way of abundant caution as `FCPL’ held warrants issued by `FRL’. 130. Apart from that, in as much as `FRL SHA’ and `BCAs’ were not notified as inter connected parts of the `Combination’, the 1st Respondent/Commission had no possibility in directing the `Appellant’ to file form II in the subject. 131. Yet another contention of the 1st Respondent/CCI is that there was no possibility for it to conduct `Combination Assessment’ from the `point of Strategic Alignments’ between `FRL’ and `Amazon group’. Continuing further, it is pointed out on behalf of the 1st Respondent/CCI that the effect of Commercial Contracts entered into between `FRL’ and `Amazon group’ entities in their normal course of `Business’ would be considerably different from `parties’ envisaging `Strategic Alignments’ between their `Business’ though `Strategic Investments’. Therefore, it is the plea of the 1st Respondent/CCI that the `Regulatory Process’ of `Notification’ and the nature of `Economic’ and `Legal’ enquiry would differ in the two situations. 132. It is projected on the side of the 1st Respondent/CCI that resting upon the Appellant’s `Notice’ and `Representations/Amplifications’ placed before the 1st Respondent/CCI, the `Combination’ was approved on 28.11.2019 and further that the `Competition Assessment’ in the said `Approval Order’ dated 28.11.2019 was limited to the overlapping `Business Activities’ of the `Appellant’, `FCPL’ and the `Group Entities’ and was adjudged unlikely to cause any `Appreciable Adverse Effect’ on `Competition’ in India, as per Para 9 of the `Impugned Order’. 133. At this juncture, it is pointed out by the 1st Respondent/CCI that in the `Approval Order’ dated 28.11.2019 given by the 1st Respondent/CCI at paragraph 16, it was mentioned that the `Approval’ was `contingent’ and shall stand `revoked’ if at any time, the information provided by the `Appellant’ was found to be incorrect. In this connection, it is the stand of the 1st Respondent/CCI the `Approval’ ought not to be construed as showering immunity in any manner from later proceedings before it for the `Breach of other Sections of the Act’. 134. According to the 1st Respondent/CCI, the `Appellant’ had presented a complete false portrayal of the `Combination’ which runs as under: